I don’t know how to handle this Economics question and need guidance.
Need 1-2 paragraphs responses (with citations) to 2 discussion posts:
1.The federal government should always strive for a balanced budget. I believe it is in the best interest of our country with the expectation that it will require flexibility as time and world events change. Realistically I do not think it is attainable in our current societal demands, global interactions and irresponsible use of earmarks by our lawmakers. Mikesell, J. (2018) explains that the government is responsible for making good financial decisions based on developed information to assist in making knowledgeable choices that improves society without overspending. According to the Citizens Against Government Waste (2019) congress has allocated over $2 billion dollars for the department of education with absurd hidden spending like $273,000 for pet projects like fighting goth culture in Missouri. While this amount may seem like a proverbial drop in the bucket against the United States $3 trillion dollar plus national deficit, these earmarked monies for pet projects add up. Balancing the budget means significant cuts that numerous parties are not willing to make. Nevertheless, reform to smartly lower the deficit in a flexible manner, paying existing debt and reducing spending is a more practical approach than trying to hit the end goal of balancing by any means.
Addressing the gains and losses of lowering the deficit depends on perspective. Two true gains from my perspective is the reduction of our debt other countries own and maintaining our countries credit rating. Currently China owns the most U.S debt at approximately $1.1 trillion dollars with 28% of our total national debt held by other countries (Amadeo, K., 2019). Striving for a balanced budget ensures we pay off our debt to other countries which will maintain our credit rating.
Losses on the other hand are subject to interpretation. These are just a couple areas that cuts in the national budget could be seen as a gain or loss.
1. Social security has a significant impact on the U.S budget. At ourcurrent rate the Social Security program will fall almost to zero revenue by 2031, which will make those starting to receive benefits today at the age of 65 suffer huge cuts by the time they are 80 (The New American, 2013). Do our lawmakers make the decision to reduce social security support to future generations because money will run out? This would be a loss to those currently paying into social security, but never reap the benefits. If the retirement age was raised to 69 to correlate with the now life expectancy of 78 would this relieve the strain on the social security system?TEMPLIN, B. A. (2011) suggests that introducing a gradual increase in the national retirement age to 68 over the course of 4 years could increase the social security shortfall by 0.57% and reduce the long term deficit by 28.5%. This could be a loss to those that may not be able bodied to work until the higher retirement age having adverse effects on society.
2. The military is another large expenditure contributing to the national deficit. This is also a gain or loss depending on your perspective. Cutting the defense budget would make a considerable reduction in our national debt. This could potentially be seen as a gain, but it also comes at a significant loss. The previous draw down and reduction of the defense budget saved money, but lost lives and put many more in danger. When defense budgets reduce so does training, maintenance, personnel and logistics support for the Armed Forces. During the draw down between 2013 and 2017 the rise in aviation accidents rose by 40% killing 133 service members (Brimelow, B., 2018). Defense budget cuts reduce the number of pilots and decrease the flight hours for training and maintenance (Brimelow, B., 2018). This is just one example of the impact of defense cuts. If we want to reduce Defense spending, lawmakers must also reduce the operations expected of the Armed Forces. During this period the budget was reduced, but the operational tempo and expectations of the Armed Forces were not. While money was gained by reducing the Defense Budget, lives were lost.
These are two example of how gains and losses are a matter of perspective. Having a balanced national budget should always be a goal. Expectation management and flexibility should guide toward balancing the budget in an attempt to maintain and improve society.
Amadeo, K. (2019). U.S. Debt to China, How Much It Is, Reasons Why, and What if China Sells. Retrieved from http://www.thebalance.com
Brimelow, B., (2018). Investigation finds disturbing connection between defense cuts and deadly military aviation accident. The Business Insider. Retrieved from http://www.businessinsider.com.
Citizens Against Government Waste, (2019). 2019 Congressional Pig Book. Retrieved from www.cagw.org
Mikesell, J. L. (2018). Fiscal administration: Analysis and applications for the public sector (10th ed.). Boston, MA: Wadsworth.
Social Security to run out of money sooner than estimated. (2013). The New American, (5), 7. Retrieved fromhttps://search-ebscohost-com.ezp.waldenulibrary.org/login.aspx?direct=true&db=edsgov&AN=edsgcl.322904418&site=eds-live&scope=site
TEMPLIN, B. A. (2011). Social Security Reform: Should the Retirement Age Be Increased? Oregon Law Review, 89(4), 1179. Retrieved from https://search-ebscohost-com.ezp.waldenulibrary.or…
2. Looking at the federal budget by categories you provided, the summary of 2017 expenditures by general categories show surprising information of federal expenditures. Three categories/figures that stuck out the most Are the following.
1) Social Security, which is the largest ( 939.2).
2) Medicare with en expenditure of ( 702.3).
3) Domestic Discretionary with a figure of 610.0.
4) The fourth largest is Defense/Foreign Affairs
Many people depend on Social Security when they reach retirement. The poor can qualify for assistance when they reach 64, based on need, of course.
Medicare charges individuals part of the cost of the social security benefits they receive. If it were to pick up the whole tab, Medicare would be higher than social security, causing it to have a deficit for overspending.
Money spent on domestic issues is also a big deal. If money were not put aside for this program, it would take a toll on the services that are provided to individuals that need it.
The last federal expense category is the Defense/Foreign Affairs. Every country has to have some type of protection; and, because the USA is the police of the world, the more it has to have a program that the federal budget supports for it to function. However, over spending on a program what is already budgeted can lead to a large deficit that needs to stop. Balancing it would be better than cutting it completely, as the program provides critical services the individuals need. it complete elimination could lead to major consequences, which might end up costing the government much more.
There is always a reason for which programs are created. If these programs were to receive less than what is budgeted, the services would not be as effective and the need would be perpetual. Money makes the squeaky wheel run. Money is the grease a program needs for its services to function properly. However, balancing a budget is Ideal but it also can create problems because that means that the government has only so much it can spend. But issues That arise from a specific nature would be ignored because the program that was supposed to deal with it might not for budgeting reasons.
According to Mucha (2012) some governments want to close large deficits. Because of that, they have turned to using Budgeting outcomes (BFO), to close their large budget defies. They do this so they would have enough in the pot to create programs and services that the public needs and expected. However, she also points out that this tool is seen as a best practice but it is not for every government. This is because some governments that might use it are not ready for it, as it has eight steps and using it requires training. This means that not one size fits all.
In addition, lately, the USA government wants to constitutionally amend the budget to balance it. To this, Blair (2018) declares it is nothing but a political stunt to want to amend it, when they actually have the power to balance the budget if they choose to do it. In April 2018, this author informed that Republicans control both houses of Congress and the presidency. This means they could balance the budget if they so disliked. Instead, they have decided that taxes would be cut for the rich. If balancing the budget would become law, it would negatively impact the economy.
Balancing budget might have some benefits for a while, provided that the surplus is used for programs that were not covered earlier and the surplus could be used for future needs. But what happens if there needs That the current budget cannot covered in a balanced budget? Where is that money going to come from To cover does programs? A balanced budget might be ideal but it does not work in the real world. It might work for a while but it might cut down services that are critical for the survival of the public. Hartman (2017) informs the reader there are several types of budgets, annual budgets, which are required by law. Then, there is the biennially balanced budget, which must cover two years of accounting. The third type is the cyclically-balanced budget. This type of budget depends on the conditions of the economy, which decides when needs ought to be balanced. This type of budget can show deficits during economic crisis. However, the cyclically balanced budget should have surpluses that are substantially beneficial in a booming economy. Thus, a balanced budget is good in paper but not in practice. Therefore, cutting down the categories addressed above could be damaging. It could possibly endanger the wellbeing of the citizens and it could cost the government even more for reducing current needs. In short, something has to give.
In conclusion, federal balanced budget are not the best way to go. Overspending for the sake of wasting money that could be used for critical programs is another story. Every program functions on a specific budget; cutting it down would not be the best policy. Functioning on its budget is beneficial for the economy and its citizens. However, needs change from year to year, which need to be taken into consideration and whatever is left in the pot, the surplus should be used to improve existing programs or implementing new ones that would address the needs of the citizen.
Blair, H. (2018). A balanced budget amendment would be extremely dangerous for the economy. Retrieved from
Hartman, D. (2017). The Advantages of a balance budget. Retrieved from https://bizfluent.com/info-7742657-advantages-balanced-budget.html
Mucha, M. J. (2012, Oct.). Budgeting for outcomes: Key findings from GFOA Research. Government Finance Review, 47-49. Retrieved from https://www.gfoa.org/sites/default/files/GFR_OCT_12_47.pdf
In terms of a good source for expenditures, I recommend the Congressional Budget Office’s Historical Budget Data found at https://www.cbo.gov/about/products/budget_economic_data#2 .
Here’s the summary of 2017 expenditures by general category (dollar amounts are in billions – total spending was $3,983,600,000,000,000 when you add all of the zeros):
Defense/Foreign Affairs $590.2
Domestic Discretionary 610.0
Social Security 939.2
Income Security 293.3
Other Mandatory 462.4
Interest on Debt 262.6
Offsetting receipts -253.0
I’ve posted this primarily to get us all on the same page in this discussion and as a future reference. What if anything surprised you about this information? What expenditures make up the largest part of the federal budget? What are some challenges in cutting those areas