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If the federal government spends more than it collects in revenue, then A) it is running a surplus. B) it is running a deficit. C) the inflation rate should decline. D) the unemployment rate may increase. 1. Population Growth ◦ U.S. is the 3rd most populous nation in the world ◦ Meeting the needs of the expanding population requires more gov’t employees (more facilities, infrastructure, police, etc.) 2. Changing Public Attitudes ◦ During the Great Depression, people began to recognize the need for gov’t intervention in the economy 3. Rising Standard of Living ◦ Once people meet their basic needs, they look to fulfill their wants, usually through spending to increase their standard of living ◦ As this increases, they also expect an improvement in goods and services (education, health care, etc.) 4. National Emergencies ◦ Gov’t will grow in times of war, etc. ◦ Never returns to previous size Gov’t spending rises as more programs are added Most of the budget is spent on social welfare programs (Social Security, etc.) 1. Maintaining Legal and Social Framework ◦ Create laws and provide courts ◦ provide information and services to help economy function better ◦ establish a monetary system ◦ define and enforce property rights 2. Maintaining Competition ◦ Create and enforce antitrust laws ◦ regulate natural monopolies 3. Providing Public Goods and Services ◦ Provide goods and services that markets are unable or unwilling to provide, such as national defense ◦ Makes them available (and affordable through taxation) to all people ◦ Shared responsibility between local, state, and national gov’ts ◦ http://www.wpsdlocal6.com/news/local/Firefighter s-watch-as-home-burns-to-the-ground104052668.html 4. Redistributing Income ◦ Higher income tax rates for rich than for poor ◦ provide social welfare programs (i.e., social security, aid to dependent children, Medicare, Medicaid)transfer payments 5. Correcting for Externalities ◦ Taxes to reduce negative externalities, such as environmental pollution (EPA) ◦ subsidies to encourage positive externalities, such as education ◦ Remember, externalities exist when some of the costs or benefits associated with the production or consumption of a product "spill over" to third parties other than the direct producer or consumer of the product 6. Stabilizing the Economy ◦ Use government budgets and/or the money supply to promote economic growth, control inflation, and reduce unemployment ◦ Responding to market failures (limiting negative externalities, providing public goods, disclosing information to consumers, etc.) 7. Regulate Businesses ◦ Prevent abuses (created OSHA, EEOC, etc.) ◦ Protects Consumers (FDA, FTC, FCC, FDIC, etc.) 8. Improve Standard of Living ◦ Gov’t is highly involved in areas of diet, product consumption, medical care, and education ◦ http://abcnews.go.com/2020/video/classroomconfidential-students-protest-healthier-lunches17353875 Well, it certainly doesn’t look like it In the next activity, you will look at the following Headlines and determine which Goal of Government it best fits Newspaper Headlines 1. 2. 3. 4. Fed. Government Approves Crime Bill; Cities to Hire Additional Police Minnesota to Sue Tobacco Firms to Recover Health Care Costs Consumer Product Safety Commission Recall of Skirts Made in India US Investigation Seeks to Find if Aluminum Producers Conspired to Cut Output, Broke Anti-Trust Laws 5. Insurer Files Suit Charging Bank Made False Claims 6. Higher Interest Rates Likely Despite Inflation Data 7. U.S. Government to Increase Aid to Education Next Year 8. Northeast's Petition for Tighter Curbs on Auto Emissions Approved by Environmental Protection Agency 9. Group of Economists Urges Federal Reserve System Not to Act Against Inflation Now 10. Hughes Aircraft to Lay Off 4,400 and Close Big Defense Plant 11. Social Security Payments to Increase by 4% Next Year: Cost of Living Allowance Up 12. Congress Approves Higher Income Tax Rate for Top Wage Earners Finally, you will watch the following video on Federal Spending and answer the questions that follow as the TOTD http://www.cleanvideosearch.com/media/acti on/yt/watch?videoId=3boBYbT_vGw