Federal Government Case Study

1. Contrast the federal government’s reasons for and practices of incurring debt with those of state and local governments, and the means they use to borrow funds.
The federal government annual budget is enormous compared to a state a local government budget. The federal budget has to maintain the infrastructure across America. As our book points out, there is an $846 billion dollar gap in repairing or replacing roads and bridges. Plus, on top of the gap, there is a yearly cost of $20 billion dollars to keep our federal highways safe. Inside the federal budget are not only the nation’s expenses but international expenses. Our taxes are also supporting wars, and the fight on terror. On top of all this is the “entitlements” or the so called …show more content…
Describe the major ways in which the management of money in government differs from that in a private business.
As our book points to five major ways that money management differs in the private world versus the world of politics (government), there are also politically motivated reasons money is management different too. There are a lot of challenges that face the government when budgeting for projects. First, our elected officials have to consider their political careers when voting to spend our money. Of course after all the responsible spending for the nations critical needs are addressed the pork spending kicks in. There is enormous outside influence from polls, and lobbyists. Where private business is in the business to make money, they are not influenced from an outside source, as our politicians are. Not to mention that our government is not in the business to make a profit. The second difference is the same for both government and private matters. If revenues are coming in both entities has to adjust. However, it seems that the government keeps spending money on some projects even when the budget does not support it. The third difference would be the fact that our laws keep the government’s open to the public to view. Private business has shareholders, and boards to report to, but not everyone knows how big corporations spend their money. Truly, I don’t think the public know exactly how the government spends our money either, but still they are different in transparency. The book writes that the fourth way that our money is spent is constrained by laws and the nature of politics. Most private companies has their own policies to adhere to, but they still have to follow laws. Lastly, the government has one big pot that monies come from, and each private business has their own funding. There are instances where big business will tap in to government funding for projects, but that is a new discussion. Each is different in many ways in how they spend money,

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