SCROLL DOWN to FISCAL YEAR 2001.  Then, continue to SCROLL DOWN and CLICK on PDF for A Citizen’s Guide to the Federal Budget. Read Chapters 1-4 only.

1. What two federal programs are counted as “off-budget” ?
2. What is discretionary spending? Give an example of it.
3. What is mandatory spending? Give an example of it.
4. Which type of spending , discretionary or mandatory, is larger? Why?
5. In which fiscal year did we experience our first budget surplus since fiscal year 1969? What was the value of that surplus?
6. Define “federal budget surplus” and “federal budget deficit”.
7. What historically were the two major causes of federal budget deficits?
8. When was our first federal budget deficit?
9. What TWO things happened during the Reagan Administration to cause federal budget deficits to increase dramatically?

Now, Visit Budget of the United States Government- Fiscal Year 2013:
http://www.whitehouse.gov/omb/budget 

CLICK on OVERVIEW

1. If this is the fiscal year 2013 budget document, when will the fiscal year begin?
2. What are the major priorities of the Obama Administration for FY 2013?
3. Among all of the proposals, list ONE which you feel might have a positive impact on you and your family. Explain why.
4. Among all of the proposals, list ONE which you feel might have a negative impact on you and your family. Explain why.

Now, Visit the Wikipedia.org to learn about the American Recovery and Reinvestment Act of 2009 and SCROLL down the page:
http://en.wikipedia.org/wiki/American_Recovery_and_Reinvestment_Act_of_2009

1. What was the purpose of this legislation?
2. What was the estimated cost of it?

1. What is the difference between the terms “debt” and “deficit”?
2. Give the current value of the national debt.
3. SCROLL down and enter December 1, 1999. What was the value of the national debt on that date? Then, enter January 16, 2001.  How did the debt change? How could it?

http://www.treasurydirect.gov/indiv/indiv.htm

1. CLICK on Treasury Bills. What are Treasury Bills? What is the length to maturity?
2. CLICK on Treasury Notes. What are Treasury Notes? What is the length to maturity?
3. CLICK on Treasury Bonds. What are Treasury Bonds? What is the length to maturity?
4. CLICK on I Savings Bonds. What are they? What is the length to maturity?
5. Why would anyone want to buy Treasury Bills, Notes, or Bonds rather than Savings Bonds?

SCROLL through the list of the fifty states and the District of Columbia.

For State Income Tax Rate (2012)

1. What is the value for Illinois?
2. What type of tax structure is our state income tax?
3. Give an example of a state with NO TAX.
4. Which state has the highest HIGH rate?

http://www.usa-sales-use-tax-e-commerce.com/table_sales_rates.asp

For State Sales Tax Rate (2011)

1. What is the value for Illinois?
2. What type of tax structure is our state sales tax?
3. Give an example of a state with NO TAX.
4. Which state has the highest rate?

http://www.ssa.gov/OACT/ProgData/taxRates.html

1. What is the tax rate for Social Security and the tax rate for Medicare for an employed worker (NOT self-employed) in 2012? (HINT: Be careful to check the footnotes!)

CLICK on Maximum Taxable Earnings

1. What is the maximum taxable income for 2012 for an employed worker for Social Security (OASDI)? for Medicare (HI only)?
2. Suppose I have $250,000 taxable income and work for Southwest Airlines. How much will I pay in Social Security and Medicare (FICA) Contributions?
3. Suppose I have $40 million taxable income and work for Goldman Sachs investment bank. How much will I pay in Social Security and Medicare (FICA) Contributions?
4. What type of tax structure is the Social Security contribution?
5. What type of tax structure is the Medicare tax?

Read about the history of Social Security Administration

http://ssa-custhelp.ssa.gov/app/answers/detail/a_id/392

1. What does FICA mean?
2. Why are Social Security taxes called FICA contributions?

Read about the Social Security benefits COLA:
http://www.ssa.gov/OACT/COLA/latestCOLA.html

1. What is a COLA? What is the purpose of a COLA?
2. What will be the value of the COLA for 2013?

1. If fiscal policy had remained unchanged from the Clinton years (up to 2000), what did the Congressional Budget Office (CBO) project would be the federal budget estimate for 2001-2008?
2. What were the two factors most responsible for their budget prediction?
3. Click on PAYGO. What is PAYGO? When was it enacted into law? Who was the President then?
4. Why did President Bush during the 2000 presidential campaign warn that budget surpluses were dangerous?
5. What was the economic effect of the six Bush tax cuts on federal government revenue and the national debt by 2008?
6. What was the effect of the enactment of Medicare Part D and the wars in Iraq and Afghanistan on the federal budget?
7. Bush tax cuts and Bush spending increases, including the emergency spending for the Troubled Asset Relief Program are often described as having been stimulative for the economy. Were they? Explain.

CLICK on New Deal Document Library and then Search by Author. Scroll down the list and CLICK on Keynes, John M. and select An Open Letter to President Roosevelt.

1. Did Keynes see recovery and reform in the United States during 1933 as simultaneous goals? Explain.
2. In the letter, Keynes writes “The object of recovery is to increase the national output and to put more men to work.” What was Keynes’s main suggestion to accomplish these?
3. Did Keynes favor government expenditure financed by loans or by taxes? Why?
4. What kind of government expenditures did Keynes recommend?
5. What was Keynes’s idea about long-term interest rates?
6. How do you think President Roosevelt reacted to the letter?

1. What impact did automatic stabilizers have on the economy during the Eisenhower Administration? Give an example of an automatic stabilizer. Why did these stabilizing factors work so differently in 1954 than they had during the Great Depression?
2. When John Kennedy inherited a troubled economy in 1961, he received very different advice from two prominent economic advisers: Walter Heller and John Kenneth Galbraith. On what major point did their philosophies and recommendations disagree? Why?
3. The so-called Kennedy tax cuts finally were approved by Congress after his assassination and signed into law by Lyndon Johnson. How effective were they?
4. When Barack Obama assumed the Presidency in 2009, he inherited a severe recession.  Why did Congress agree to the American Recovery and Reinvestment Act?  How effective was it?
5. By 2011, when the economy appeared to be sputtering on its way to recovery, President Obama and the Democrats proposed additional actions to increase government spending to stimulate the economy and keep it from falling back into a recession.  However, the Republicans in Congress chose to support austerity and the Ryan proposals to reduce spending and reduce taxes.  Why was there disagreement over the need for stimulative fiscal policy actions?

1. What is the explanation of the Taylor Rule in the text? What is it supposed to tell us?
2. Give Rudebusch’s version of it.
3. What is the current CBO (Congressional Budget Office) estimate of NAIRU (NRU in our text)? What does NRU represent according to our text?
4. If the current unemployment rate was 6.5%, what is the value of excess unemployment?
5. While one can calculate a negative value using the Rudebusch formula, can it be negative in reality? Why?