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US federal budget. How is money spent by the government?
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In fiscal year 2015, the federal budget of the US was $3.8 trillion. These trillions of dollars make up about 21 percent of the U.S. economy (as measured by Gross Domestic Product, or GDP). It's also about $12,000 for every woman, man and child in the United States.
The U.S. Treasury divides all federal spending into three groups: mandatory spending, discretionary spending and interest on debt. Mandatory and discretionary spending account for more than ninety percent of all federal spending, and pay for all of the government services and programs on which we rely. Interest on debt, which is a much smaller amount than the other two categories, is the interest the government pays on its accumulated debt, minus interest income received by the government for assets it owns.
Discretionary spending refers to the portion of the budget that is decided by Congress through the annual appropriations process each year. These spending levels are set each year by Congress. By far, the biggest category of discretionary spending is spending on the Pentagon and related military programs.
Mandatory spending is spending that Congress legislates outside of the annual appropriations process, usually less than once a year. It is dominated by the well-known earned-benefit programs Social Security and Medicare. It also includes widely used safety net programs like the Supplemental Nutrition Assistance Program (SNAP, formerly food stamps), and a significant amount of federal spending on transportation, among other things.
How Are Social Security Benefits Paid Out? Ida May is a striking example of the first generation of Social Security beneficiaries who were the big winners.
How Are Social Security Benefits Paid Out? Individuals can receive their Primary Insurance Amount (PIA) starting at age 65, which is the Full Benefits Age (FBA). As a result of 1983 legislation (discussed in more detail later in this chapter), the FBA is currently slated to rise to age 67 for those born in 1960 or later.
It is possible to receive benefits as early as age 62, the Early Entitlement Age (EEA). For each year of benefits claimed before age 65, however, there is an actuarial reduction in benefits of 6.67% per year so that individuals who claim their benefits at age 62 receive 20% less in benefits than those who claim benefits at age 65.This is called an “actuarial” reduction because it is designed to compensate for the fact that individuals who take benefits early receive them for more years.That is, if you and I are the same age, and I claim benefits at age 62 and you claim them at age 65, and we both live to age 75, then I get three more years of benefits than you do.The reduction in benefits that I receive each year is designed to compensate for the fact that I get three additional years.With the actuarial adjustment, we can both expect to get the same total amount of benefits in our retirement years. Similarly, if you decide to wait past age 65 to claim benefits, you receive a delayed retirement credit (DRC), which raises your benefits for each year of delay by 6% (rising to 8% by 2008).
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The very first beneficiary of Social Security was Ida May Fuller. Ida May was born on September 6, 1874, on a farm in Vermont, and attended school with future president Calvin Coolidge. Ida May worked for only three years after the establishment of the Social Security system, and paid a total of $24.75 in Social Security taxes. On November 4, 1939, she dropped by the Social Security office in Rutland,Vermont; as she later said,“It wasn’t that I expected anything, mind you, but I knew I’d been paying for something called Social Security and I wanted to ask the people in Rutland about it.” Ida May’s case was the first one processed by the new Social Security Administration, and so the first Social Security check in U.S. history was issued to her on January 31, 1940, for $22.54.
Ida May went on to live for 35 more years, dying at age 100 in 1975. Over those 35 years, she collected a total of $22,888.92 in Social Security benefits. Quite a return on her $24.75 investment!
3.Federal Education Spending, FY 2015. Explain the Crowd -Out Problem in Education. How would this "solve" with the Educational Vouchers? How vouchers will lead to excessive school specialization or to Segregation?
Education spending for elementary, secondary and higher education is projected to account for 6 percent of total federal discretionary spending in fiscal year 2015. Discretionary spending on education will total $70 billion in 2015. Major education programs funded by the federal government include Title I grants to public schools, Individuals with Disabilities Education Act (IDEA) grants to states, and Pell grants for college tuition.
Crowd-out problem in education: As the government provides more of a public good, the private sector will provide less. This decrease in private provision will offset the net gain in public provision from government intervention. Crowd-out is a classic example of the unintended consequences of government action. The government intended to do the right thing by increasing fireworks to the social optimum. But, in fact, it ended up having no effect, because its actions were totally offset by changes in individual actions.
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10-a.
3.1 - Medicare part D would cover 75% of the cost of the drug for Artie, since adding the new drug
would increase his expenditures from $1,000 to $2,000. The drug would therefore cost him an additional $250 out of pocket each year. Bella would have to pay a full $1,000 out of pocket for the drug, since she is in the “donut hole” of coverage between $2,500 and $5,100 per year. Carmen is above the “donut hole” and would have to pay only $50 (5% of $1,000) for the drug. All else equal, then, Carmen would be the most likely to take it, then Artie, then Bella.
3.2 - нет в интернете
VARIANT 9
Optimal fiscal federalism. Redistribution across communities. Grants. Problems of fiscal federalism in Russia and OECD countries.
Optimal fiscal federalism, the question of which activities should take place at which level of government. In a perfect Tiebout world, we would not redistribute across communities: communities would have formed for the efficient provision of public goods, and any redistribution across them would impede efficiency. To the extent that Tiebout does not perfectly describe reality, however, there are two arguments for redistributing from high-revenue, high-spending communities to low -revenue, low-spending communities. The first is failures of the Tiebout mechanism. The second reason for redistribution is externalities. If a large share of local tax revenue is spent on local public goods with spillovers or externalities for other communities, there is a standard externality argument for higher levels of government to subsidize spending in the communities providing the externalities.
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