POLI 2051 Lecture : Lecture Ch3
Document Summary
Congress establishes mandatory spending on programs like social security, medicare, and medicaid through the legislative programs. There is, separate , an annual (or annual-ish) appropriations process by which congress decides how much money the pentagon and other discretionary agencies should spend in any given year. And separately from that, congress every so often changes the tax code which, combined with the ups and downs of economic life, determines how much money comes in. (when economy goes south people spend less money) The treasury then sells bonds to make up the difference. But the selling of bonds does not by itself allow for any extra spending beyond what"s been authorized by law. All it does is prevent the federal government from reaching a calamitous situation in which it cannot pay bills that it is legally obligated to pay including bills it owes to buyers of previous rounds of federal debt insurance.
