Economics 5.3

Match the following

• Shrink Government

• You believe that we’re better off with a leaner federal government, shifting responsibilities to the private, non-profit and state and local sectors. Spending on general government operations and federal programs (other than health and retirement benefits) is projected under current policy to decline over the next decade. You’d reduce it more.

• Fiscal Hawk

• Under current policy, about 60% of the increase in federal spending over the next decade will go to Social Security, Medicare, Medicaid and other major health programs, much of that for the growing number of people who will be over age 65. You want to protect benefits for senior citizens.

• Shield the Elderly

• Spending on retirement, health and other government benefits, much of that for the elderly, account for two-thirds of non-interest spending today and threaten to squeeze out spending on everything else—from equipping soldiers with modern gear to repairing old bridges to pursuing cures for cancer. You want to restrain this spending to make room for other priorities.

• Invest in the Future

• You’re not satisfied with restraining the projected increase in the federal debt so that in 25 years it’s roughly where it is today, measured as a share of the overall economy. To put the government and the economy on a sounder footing, you want to reduce it substantially below today’s levels.

• Rein in Entitlements

• You believe in planting seeds today that will be harvested in years to come. You want policies to increase, above what’s currently projected, government and private investment in children and young adults and in education, infrastructure and research that will pay off in the future. (To reach fiscal sustainability, you’ll have to pay for these somehow.)

What are the two types of spending?

(a)  

Spending required by law is known as

• discretionary spending

• mandatory spending

• federal spending

• surplus spending

Which of the following NOT considered mandatory spending?

• national parks

• Medicare

• medical assistance for low-income families

• Social Security

Which is considered discretionary spending (select all which may apply)

• national parks

• Medicare

• nuclear energy

• Interest on the debt

• education

According to the graph what are the two largest mandatory expenditures?

• Healthcare (medicare & medicaid)

• Social Security

• veterans benefits

• income security programs

Discretionary spending is spending that

• can be adjusted

• is required by law

• must be approved because it has been requested by the President

Medicare, Social Security are also known as

• deficits

• discretionary spending

• entitlements

• for low income families

The problem social security is facing today is

• there are too many workers

• there are too many people that are retired

• congress can cut it whenever they want since it is discretionary spending

• social security does not have problems at this time

Entitlement Programs

• Def. Spending category where government can choose how to fund.

• Giving Money back to investors.

• Social welfare programs that people are “entitled to” if they meet certain requirements. Congress must fund these programs.

• An initial public offering that gives investors a small amount of share in a business for a price.