• Around $4.4 trillion

• Discretionary Spending is money that Congress can adjust annually during the budget process (like defense, education, and transportation).

• Income taxes, Sales taxes, Federal grants

  
  

  What percentage of the State Revenue is from General Tax Sources?
  About 75% comes from general taxes.

  
  

  
  

  What Sources of Revenue exist that are exclusive to the State level of government, compared to local governments?
  

  State income taxes, Statewide sales taxes, State lotteries, Fees for professional licenses (e.g., doctors, lawyers)

  
  

• Parks and playground maintenance

• Public libraries

• Community recreation centers

• Museums and cultural events (like local festivals)

• Sports leagues and public sports facilities

• Public swimming pools

• Top 3 Categories of Local Spending:
  

  1. Education (schools)

  2. Public Safety (police, fire departments)

  3. Infrastructure (roads, public works)

     
     

  Money Received by Allendale from State Government:
  (Again, this depends on your class’s data — if you send it, I’ll add it here.)

  
  

  
  

  What’s Included in “Recreation and Culture” Section:

  1. Parks and playgrounds

  2. Libraries

  3. Community centers

  4. Public festivals and museums

     
     

• Similarities Between State and Local Revenue Sources:
  

  • Both rely heavily on taxes.

  • Both can receive grants from the federal government.

  
  

• Differences Between State and Local Revenue Sources:
  

  • States get income tax revenue; locals rely mainly on property taxes.

  • Local governments collect service fees more often than states.

    
    

• Similarities Between State and Local Spending:
  

  • Both fund education, public safety, and health services.

    
    

• Differences Between State and Local Spending:
  

  • States spend more on highways and healthcare programs.

  • Local governments spend more on schools, police, fire services, and local parks.

1. President Submits a Budget Proposal – The President sends a suggested budget to Congress.

2. Congress Creates a Budget Resolution – Congress reviews and agrees on overall spending goals.

3. Appropriations Committees Write Spending Bills – Committees create bills to fund different parts of the government.

4. Congress Votes and Passes the Bills – House and Senate vote to approve the spending bills.

5. President Signs or Vetoes Bills – The President signs the final budget into law (or vetoes it)

Expansionary fiscal policy is when the government increases spending or cuts taxes to stimulate economic growth, especially during a slowdown or recession.

Ex:

• Sending out stimulus checks to citizens.

• Lowering income taxes.

• Building new highways, bridges, or schools to create jobs.

Ex:

• Cutting government programs and services.

• Increasing taxes on individuals or businesses.

• Reducing government employee wages or benefits.

• Political Pressures: Leaders may make decisions based on politics rather than economic needs.

• Increased National Debt: Spending more without raising taxes can make the national debt grow.

• Forecasting Problems: Economic conditions can change unexpectedly, making policies less effective.

• Crowding Out: Government borrowing can push out private investment by raising interest rates.

Ex: Buying bonds = puts more money into the economy (stimulates growth)

• Selling bonds = takes money out of the economy (slows down inflation)

Ex: Lowering the discount rate encourages banks to borrow more and lend more.

• Raising the rate discourages borrowing (slows down inflation).

Ex: Lower reserve requirement = banks can lend more = more money in the economy.

The interest rate banks charge each other for overnight loans. The Fed targets this rate to influence economic activity.

IORB (Interest on Reserve Balances):

The Fed pays interest on the money banks keep in reserve. This acts as a floor for the FFR—banks won’t lend money to each other for less than they can earn from the Fed.

Why it matters

If the Fed raises the IORB, banks are more likely to keep money in reserves instead of lending it. If the IORB is low, banks are more likely to lend money, increasing circulation in the economy.

• Time lags: It takes time for policy changes to impact the economy.

• Unpredictable behavior: Businesses and consumers might not respond as expected.

• Liquidity trap: In a recession, even low interest rates might not encourage borrowing or spending.