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Bell Ringer • This helps to understand the US debt: • U.S. tax revenue: $2,170,000,000,000 • Fed budget: $3,820,000,000,000 • Deficit: $ 1,650,000,000,000 • National debt: $14,271,000,000,000 • Recent budget cut: $38,500,000,000 Please put your Budget Simulations HW in the bin! • Let’s remove 8 zeros and pretend it’s a household budget: • Annual family income: $21,700 • Money the family spent: $38,200 • New debt on the credit card: $16,500 • Outstanding balance on the credit card: $142,710 • Total budget cuts: $385 • In your opinion, why are American politicians still avoiding tackling the U.S. debt? Think about how spending cuts (welfare for those in poverty & the elderly, roads/infrastructure, education, research, etc.) and tax hikes would affect our everyday lives. • http://www.usdebtclock.org/ US Executive 3 Monetary Policy & Budget Process Today we will … Objectives Agenda • Review executive orders, impeachment & succession. • Describe the steps in creating the US national budget. • Explain the role of The Federal Reserve in monetary policymaking. • Compare/contrast fiscal & monetary policy. 1. Presidential Odds & Ends 2. Fiscal Policy - Creating US National Budget slides/notes 3. Monetary Policy – The Fed video & questions 4. Closure - Fiscal & Monetary Policy FRQ HW: • Foreign Policy RQs (1/30) • Topic Statement (’d 1/30) Executive Orders • A rule or regulation issued by the President that has the force of law. • Congress acts in response to or in anticipation of executive orders (preempts and compromises) Impeachment • The House can “impeach” the President. • The Senate conducts a trial & votes on impeachment. • The Supreme Court Justice presides over the trial. • Presidents: 1. Andrew Johnson acquitted 2. Bill Clinton - acquitted ▫ Nixon resigned before impeachment Check for understanding • Specifically explain how a president can be removed from office. Provide at least one historical example of this process being used. Economic Policy Overall goal is to regulate & ensure the stability of the economy. Fiscal Policy Goal: put more $ in people’s pocket Manage the economy by controlling taxing & spending. How can the Pres. influence? How can the Congress influence? Monetary Policy Goal: regulate money supply to increase or decrease the nations level of business We want a productive growing economy but it can’t grow too fast Inflation! Inflation • When the value of money goes down. This means that it costs more money to buy products. • The more money there is out there being spent, the less the money is worth. The supply is high, thus the value is comparatively lower. • What this also means is that people are spending, and this is good. • Proper balance between a healthy amount of spending and money in circulation & an acceptable level of inflation. • Economists have placed "healthy" inflation at 2 - 3%. This shows spending growth and expansion, any more and we begin to worry. Fiscal Policy Actions ▫ Raising & lowering taxes ▫ Spending 1. Mandatory Spending – obligated by previously enacted laws Entitlements (ex: Social Security, Medicare) Interest on the debt 2. Discretionary Spending – controlled thru regular budget process • • • • Defense budget Education Environmental Protection Agency Department of Veterans Affairs Social Security & Medicare as % of GDP How National Budget is Prepared Federal Reserve Video – 14 min. https://www.youtube.com/watch?v=KN3kD4T3ltY&feature=re lated Fiscal & Monetary Policy FRQ