Government Spending
A crucial area of the government's budget is spending. The decisions a government makes about where it spends money has a huge impact on the economy, on communities and on your day to day life.
Before we start looking at some of the different ways a government will spend its money, let's find out where the money comes from. The largest source of government expenditure comes from taxation. Different forms of taxation are around you every day and are used to fund government spending in a multitude of ways. For example, tax that you pay as an individual and the tax that companies pay generally go directly to the government for spending. Sales tax (the percentage of tax that you pay on the goods and services you purchase) and property tax (residential and commercial) are usually paid to your state government.
There are two types of government spending which are usually referred to as discretionary and mandatory spending. Discretionary spending includes money for key organizations such as the FBI and the army. Congress will decide how much money it will award to organizations each year. Discretionary spending makes up approximately one third of all the federal government's annual expenditure.
The second form of spending known as mandatory spending relates to funding key areas in the community. These include medical or health insurance, social security programs and all other entitlements for the elderly, unemployed, incapacitated etc. The amount of money used for mandatory spending can only be predicted by Congress. It is determined by how many people are entitled to receive these benefits.
You can see how government spending is broken down by the following example. The U.S. Congressional Budget Office is tasked with reporting on federal government spending each year. In 2004, the government was expected to spend $2.293 trillion dollars in total. The areas in which the money was to be spent included benefits for retirement and disability ($136 billion), other welfare programs ($191 billion), health insurance including Medicare and Medicaid ($473 billion), defence ($486 billion) and social security ($492 billion.)
For more infomation on government finance choose from the list below. |
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Banking - Business Finances - Economics - Insurance - Investing
Major Purchases - Personal Finances - Stock Market - Taxes
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