Government Spending | Government Finances

Report on TARP Claims Government Bailouts at Least Partially Successful

As children will one day study in History class, the Federal Government was very busy bailing out failing companies throughout 2008 and 2009. These bailouts notably included mortgage giants Fannie Mae and Freddie Mac, automobile manufacturers General Motors and Chrysler and financial institutions including Bank of America and the Goldman Sachs Group.

Since the passing of the Troubled Asset Relief Program (TARP) in 2008, pundits, politicians and citizens alike have questioned whether government bailouts were a good idea. In 2011 it has been determined by a Congressional Oversight Panel that while the bailouts were at least successful in preventing an even worse economic crisis, they might have negative ramifications in the long run.

The panel issued its final report in March of 2011 and concluded that TARP should be considered a success because of the resulting economic recovery and stabilization of Wall Street. However, the report also noted that homeowners and the rest of the general public (“Main Street” as opposed to “Wall Street”) have not benefited nearly as much from programs aimed at providing them with aid.

The report also cautions that some precedents set by TARP may lead to future crises, including the reinforcement of the idea that the government will bail out corporations who partake in reckless behavior and a lack of transparency that angered the public.

The panel concluded its report with the observation that the thorough scrutiny of TARP contributed greatly to its success, and that such scrutiny would also benefit future government programs.

Filed Under: General, Government Spending Tagged With: Freddie Mac, Troubled Asset Relief Program, Wall Street

Medicaid Pits Governors Against the Federal Government

In a time when states are severely strapped for cash, anything and everything is on the chopping block. Medicaid is a large burden on state budgets, draining them at a rapid pace. In order to stop the bleeding, some states are working on cutting their funding to their share of Medicaid. California is looking to trim 1.7 billion dollars off of their rolls. Suggested changes are to limit doctors visits to 10 a year and six prescriptions a month. Considering that Medicaid covers young children and disabled adults, that is a lot to ask for California residents to take on out of their own pocket. This demographic is sorely pressed to find employment and are reliant on benefits in order to make ends meet.

States are facing a bad situation. In order to save money, they must shed people off the rolls. Those who are taken off run the risk of seeing their quality of life suffer. People tend to vote, and will have long memories. They will not be so forgiving of the politicians who made their lives worse. And that is the problem at hand. In order for states to find ways to balance budgets, they have to make unpopular cuts. Constituents do not want to accept the fact that hard times are ahead. Unfortunately, there is no way to stall the reduction in services as time has run out.

The federal government provides the lion’s share of Medicaid funding, but some of that is soon to run out. States have their hands tied behind their backs, what with the maze of federal requirements for programs. Arizona’s governor, Jan Brewer, has written a letter asking to be excused from having to provide for one program as the state has no money. It is only a matter of time before there is a showdown between the feds and the states over Medicaid.

Filed Under: Capital, Government Spending Tagged With: California, Jan Brewer, Medicaid, Order (biology)

The Stagnant Jobless Rate in the US and its Effect on Politics

The elections of November 2010 were supposed to be sending a message to Washington D.C. People were mad as heck and they weren’t going to take it anymore. What were they angry over? Jobs and the lack of them. Certainly a 10% employment rate means that 90% of Americans are employed, but that is a simplistic stance to take. It does not address the fact that there is a ripple effect in wages. Those who are willing to take any job at any wage puts pressure on the next tier and so on and so forth so that the currently employed are squeezed. The effect of this squeeze is that the middle class shrinks rapidly, while putting even more money into the pockets of the wealthiest.

There are those who will say that it is the economy, not the government, who is at fault. Yet it is choices that are made by the government that affect the economy. High-powered executives pressure the government to pass legislation that is favorable to them. Favorable in a way that allows them to outsource jobs overseas. Paying lower wages increases the bottom line and adds to the millions that they have already made. It is simple greed that is causing the US economy to be manipulated.

As long as those who are in power kow-tow to the business interests, the job situation will not improve. Politicians court those who donate handsomely to their campaign funds and turn their back on those they claim to represent. And as long as people are addicted to the cheap goods that are purchased at big box stores, the job situation will take that much longer to rebound. It will take a major shift in the mindset of citizens and politicians alike to bring meaningful jobs back to the US.

Filed Under: Government Spending Tagged With: Unemployment

About Government Bonds

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Government bonds, or municipal bonds, are issued by cities, counties and states in order to raise money for community projects. Projects may include highways, schools or building new hospitals. The primary reason why people buy these bonds are that interest paid to the owner of the bond is tax exempt from all Federal taxes. Additionally the owner is exempt from local taxes if they reside in the state in which the bond was purchased. There are many benefits to purchasing this kind of bond, but as with any investment there are a few tips that should be considered before the purchase of the bond.

There are two types of municipal bonds that individuals can purchase. The two types are general obligation and revenue bonds. General obligation bonds are issues to individuals to pay for city or state projects, like schools and road repair. Revenue bonds are issued by a certain sanctioned company approved by the city or state. For example a utility or water company and the bond holders are paid their interest out of revenue received by the company. This revenue is from the bill payments that water or utility customers pay monthly.Many non-profit organizations invest in municipal bonds because of the tax break, as do high income individuals and families.

While anyone can invest in municipal bonds, there are a few tips to remember when purchasing municipal bonds. Is the area where the bonds are derived from a economically sound place, with a diverse economy, large population and a history of paying their financial obligations. If the answer to all of these questions is yes, than the municipal bonds may be worth purchasing. Most public libraries have databases with county, city and state records of which this information can be obtained. Even public and government offices are assigned a credit rating, remember to check the credit score of the municipality of which you are considering buying funds.

Filed Under: Government Spending Tagged With: bond, Business, General obligation bond, Investing, Investment Company Institute, Municipal bond, Stocks and Bonds, United States

How to Invest in Government Securities

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If you are looking to update your financial portfolio, investing in government bonds and treasury notes can be an excellent way to add diversity to your portfolio. People usually invest in these kinds of bonds because they are relatively low risk and have low interest rates. Investing in these bonds can be quite easy and involve

The first step to obtaining a government security bond is to open an account at the Treasury Direct, using their webpage. You will need an account to purchase any kind of bond or security. The items sold are treasury bills, treasury notes and saving bonds. When you open account on this web page you will need to provide either a savings or checking account to link to your Treasury account. This makes it possible to buy bonds and securities using the web to transfer money from your account.

The next step in buying a government bond is to decide what kind of bond or note you would like to purchase. Treasury notes, or T-notes, earn a fixed rate of interest every six months, and may be issued in 2,3,5, 7 and 10 year terms. The minimum amount one can buy a T-note for is $100. Treasury bonds also pay a fixed interest rate every six months until maturity. T-bonds are only issued in 30 year terms, with minimum purchase of $100 required.

Once you have settled on what kind of bond or note you would like to purchase you can easily use your Treasury Direct to initiate the purchase. Any interest you earn will go straight to your bank account. When the bonds or notes reach their maturity you will be able to cash them out for the money that your spent plus interest (if you havenâ€™t collected on it yet). With such low risks involved, the ease of obtaining a bond and low financial requirements, governments are popular investment choice for people looking to diversify their portfolios.

Filed Under: Government Spending Tagged With: Executive, Separation of powers, Supreme court, United States, United States Congress, United States House of Representatives, Vice President of the United States, Washington DC

How the Government Works

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Whether a fan or opponent of how the United States government is ran, there is a definite need for the government as a whole. Whether people follow or don’t follow the laws and rules, they are in place for the good of all. There are three branches of government, executive, judiciary and legislative, all formed to create a democracy and create the best place to Americans to live. The goal of the government is to create a free and fair society for all living here.

The executive branch of the US government is the highest branch of government, and ensures that all laws of the nation are obeyed. The President is the head of executive branch and the highest leader in all of government. The President of the United States is also the head of the military, and highest commander of all branches of military. This is a large branch, so the President receives assistance from the Vice President, and the heads of all the departments (i.e., Secretary of State, Secretary of Treasury, Secretary of Defense, etc.).

The legislative branch of government is composed of the Congress. The Congress includes the House of Representatives and the Senate. The House of Representatives has representatives from all 50 states, and the state sends a number of representatives based on the size of each state. Representatives serve a two year term, with no term limits in place. The Senate has 100 members, with each state sending 2 senators to Washington DC. Each senator serves six years with no term-limits.

The judiciary branch of government makes up the court system of the United States. The Supreme Court is the highest court in the United States. Their job is to make sure that the laws and rules established in the Constitution are followed. They listen to cases, decide on appeals and interpret the meanings of different laws.

Learning More About What The Government Does With Our Tax

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When you pay taxes every year it’s only natural to want to better understand where those taxes go and what they’re used for. After all, it’s your hard-earned money that they’re using, why shouldn’t you be able to better understand what it is that they need it for in the first place? The short answer is: a whole lot of things. The government that you pay your taxes to is broken into three parts, country, state, and local, depending on how large the city happens to be. For this reason, knowing where your tax money can be every bit as hard as figuring out where the money came from in the first place.

Not only is tax money going towards interesting things like the trips which promote diplomatic conversations but it is also being used to fund the soldiers who are currently being kept overseas. This is incredibly important on both levels as they help the soldiers with both funding and equipment. Additionally, tax money can be sent towards hospitals and nursing homes or schools.

Of course, there is always the health care bill and the bail out funds which will obviously be fairly large and difficult to pay back over the years. However, the government is making an effort at trying to do so. Additionally don’t forget about your local and state governments as well. These governments collect your taxes to use to replace roads, provide services and the like.

There are plenty of other useful and interesting things that the government spends your tax money on. Surprisingly it isn’t simply for trips around the world or for public events but also for many important and life changing events that are designed to help all citizens, not simply for those work in government. Although many people complain about taxes, without them, the government could not provided the needed services for its citizens.

Filed Under: Government Spending Tagged With: Accounting, Business, Government, Money, Nursing home, Tax, Taxation, United States

Government Spending That You Don’t Really Think About

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While it is true that your tax money gets spent in large and extravagant ways if you’re a citizen of the United States of America on things such as health care, Social Security, and military spending, you’re more than likely not seeing all of the other little things that your hard-earned tax money goes towards.

It’s not always something huge and imposing like the three already listed, nor is it any less important, like natural disaster relief, it’s simply that certain things take more and others take less and, due to the amount of money the government takes in right now, these are usually skewered because they never have enough money to really put in the amount that they should to most things.

The government also invests in something called income security which, according to 2009 government spending data, takes up a little over $130 per thousand a year. This amount covers unemployment insurance, food and nutrition programs, housing assistance, and the cost of retirement for federal workers. Surprisingly, the cost of retirement for federal workers is actually the most expensive of the income security area at about #40 per thousand a year.

Something that may surprise some people is that the government spends less than $50 per thousand a year on the educational system. About $20 of it goes towards colleges while another $15 goes towards elementary and secondary schools. The rest of the money goes towards training programs for those who work in the schools in addition to the social services which are related to both education and the training.

The last few dollars of the budget get tucked away into surprising places. There’s less than $10 per thousand that was devoted to the sciences in 2009. There’s also transportation of all types which costs around $30 per thousand a year. The Administration of Justice and their courts and prisons only got about $16 per thousand last year.

Filed Under: Government Spending Tagged With: Barack Obama, Government spending, Medicaid, Medicare, Politics, Social Security, Unemployment benefits, United States

Basic Government Investments

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Despite the large federal bailouts, much of the tax money that you pay doesn’t go towards the companies that were bailed out. As a matter of fact, the majority of those companies weren’t so much bailed out as they were loaned the money. Just like a bank, the government invested in the future of America by not letting the financial market crash and, by doing so, gave companies a loan with the full expectancy of its eventual return, sometimes with interest, sometimes without. As a matter of fact, at least one of the companies has already paid back the money that the government lent them in full. Due to this, it’s plain to see that at least some of the companies fully intend to and, certainly, the government didn’t just hand them the money with no desire to have it returned.

If it had been under any other circumstance, the bailout would have been looked upon as a sound investment in the future. Or as a nice gamble, something that the financial market is very used to doing as that is essentially what the stock market is, only it tends to be slightly more stable than regular gambling would be. While it certainly is true that Americans will be paying for this debt out of their taxes, it will be spread out in a way that makes it more like every other investment that the United States government makes.

Most of the taxes will more than likely continue to go towards big things like health care, social security, and military spending with the additional funds going to the regular miscellaneous but still important things like education, natural disaster relief, income support, and other similar things. Despite the concern that the bailout would drastically change the taxes of those who live in the United States, there are already plenty of investments that the government makes that we pay off, anyway, and that are considered perfectly sound.

Filed Under: Government Spending Tagged With: Bailout, Business, Financial market, Investing, Investment, Money, Tax, United States

Learn More About Government Investments

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When you get to the end of the tax year and you have to fill out your tax form to mail off to the IRS, you might be wondering why you even have to bother when you don’t really see where the money’s going. In truth, the money’s going a whole lot of different places. Regardless of what people may think, the government does not generally invest in businesses in any way other than providing help to those that need it. In fact, the three biggest items that the government invests in yearly happens to be Social Security, defense spending, and health care.

The part that goes towards health care is what helps to support Medicare, for people over 65, Medicaid for children who’s health insurance is covered by the state, and low income families who cannot fully support themselves in the face of large hospital bills. Additionally, another chunk of your taxes goes towards Social Security which is something that, until a certain generation, most will be benefiting from later in life. There’s also the defense spending that takes up a good bit of money. Supporting the military includes paying the salary for troops, the military-related things that were bought for them, the testing, research, and development of those things that were bought, and a few extra things here or there. The total of all of these things in 2009 was about $200 a piece. However, there is more that the government invests in.

A second part to military spending is that the military tends to spend more than it’s given and the government covers that by selling bonds to people. However, because military spending is a government thing in the first place, they obviously have a bit of trouble paying it back in addition to everything else, so they pay interest on it which is where another $120 dollars comes from. As you can see, many investments don’t go to businesses.

Filed Under: Government Spending Tagged With: Barack Obama, Health care, Medicaid, Medicare, Military budget, Politics, Social Security, United States