McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved.
Chapter 9
Federal Spending
McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved.
Chapter Outline
•A Primer on the Constitution and
Spending Money
•Using our Understanding of Opportunity
Cost
•Using our Understanding of Marginal
Analysis
•Budgeting for the Future
McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved.
Federal Spending as a
Percentage of GDP
10
12
14
16
18
20
22
24
F e d e r a l S p e n d i n g /
19471951195519591963196719711975197919831987199119951999
Year
Federal Spendi
as a % of GDP
McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved.
A Primer on the Constitution
•“No money shall be drawn from the
treasury, but in consequence of
appropriations made by law;..”
•Both houses of Congress must pass
identical bills
•President must sign or have veto
overridden
McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved.
The Budget Process
•President sends Congress a proposed budget
•Congress passes its version of the budget
(the president does not have to sign or veto)
•Congress passes Appropriations Bills
•President signs or vetoes Appropriations Bills
•Tax Law changes must originate in the House
of Representatives