Governmental Budget Constraint

And finance Allah shmoop What is the federal budget And

no it's not an oxymoron Okay people sing it with

me I am the very model of a modern budget

Federal cost trillions Whether Congress is conservative or liberal that's

a four with twelve zeros for commas and no decimal

Most funds come from income taxes both corporate and individual

Ah third from payroll tax is blah blah blah OK

at the music Air people boy Yeah that was Gilbert

and Sullivan Ask your great grand parents about that one

Anyway Here's the money that comes in from the federal

government It's what they spend We've got forty seven percent

from personal income taxes That's like revenue to government on

our backs Those air the tax returns you have to

file of recorder and then finally every April fifteenth Then

there's another nine percent of federal revenue that comes from

corporate taxes Basically income taxes for Cos The next big

chunk comes from payroll taxes yet another tax on corporations

It makes up about a third of the federal government's

revenue And that's the money that's earmarked or tagged for

Social Security that while you and your employer page time

you get your paycheck Well then you've got some little

stuff that trickles in You've got tariffs and small stuff

that doesn't really add up to a whole lot anyway

So that's how the money comes in Those bear the

revenues that run our government members of Congress I'll figure

out what they want to spend money on Basically once

they make a deal they need to get the president

to sign off on it And if it's a big

budget item and basically that's how budgets get made So

how does the federal government spend our money Well three

fifth of the total budget goes to social programs that

stuff like Social Security the unemployed Medicare Medicaid and all

those types of programs Three fifth that sixty percent of

our total budget goes for all this stuff Right down

here we were listing for you They're for free After

that well about a sixth of the budget goes to

the military Another six percent gets spent on debt service

That's just paying the interest expense on the bonds the

U S Government has issued to make up for its

deficit spending What is deficit spending It means that when

we do our budget we take in less money than

we spend So we have a deficit or earnings losses

If we record operation basically year after year after year

and we have to borrow money to make up for

the annual massive losses Yeah runs a company like that

All right well let's look a little closer The federal

government spending here there's too broad categories that spending falls

into There's mandatory spending and that stuff that's been budgeted

by previous legislation lease already been committed to Contractually we

have to spend the money There's no optionality here It's

set in stone is part of the social programs the

so called entitlements you hear about in the press all

the time You know stuff like Social Security unemployment Medicare

Medicaid And if we don't spend that money for all

the old people who are sick and miserable and dying

while they would be even sicker and more miserable and

dying faster so we have to spend that money The

other big part of the federal budget is called discretionary

spending This is also stuff that lawmakers can negotiate on

a year to year basis The biggest part of the

discretionary budget is the military well The budget also includes

benefits for veterans and that's like stuff like Gil mental

care for people who did one hundred ninety seven jumps

into Afghanistan and now have PTSD It's also people who

got Lim shot off defending our country So they call

that discretionary But it really isn't There's a number of

other smaller expenses that fit into this part of the

budget There's money for housing money for education money for

international aid pretty much anything else But it's important to

remember that the mandatory spending and the military make up

the biggest part of the Total Budget III What we

spend more money on ad in the service on the

dead I'ii interest payments and all of that Together those

programs equal eighty two percent of the federal budget OK

about those debts Well each year the government out spends

its revenue like we said and that's what's called our

deficit spending here So to make up for this the

government has to borrow more and more and more money

And it does so by issuing bonds T bills chinos

long bones all that kind of stuff Every year these

additional deaths get thrown onto the ever growing pile of

debt And this is what's called the national debt Right

You see signs that calculate our national debt how fast

it's growing and all that Well as of press time

right now that total national debt tops twenty one trillion

dollars and it's growing all the time All right so

let's go out on a big finish here Ready Oh

I am the very model of a modern budget federal

iris Men in black make sure revenue states accountable Spending

mandatory These things they say are not negotiable Discretionary choosing

stuff by mainly troops and generals Don't forget interest charges

These things are not ephemeral Sorry we're almost done here

to pay for this We run up debts that some

might call incredible To keep this up we better keep

our credit rating credible and pray to pay for all

the programs running within the state Several I am the

very model of a modern budget federal who feeling a

little lightheaded here All right I think I'll just light 00:05:00.153 --> [endTime] out for a second federal budget Good luck