Reducing the Budget Deficit Paper Example

What criteria did you use to decide which areas received the most or least amount of the budget? What is your rationale for your funding decisions?

The federal government closed the 2017 financial year with a budget deficit of $666 billion representing an $80 billion increase from the 2016 fiscal year (Schroeder, 2017). Therefore, it is fundamental to solve the budget deficit as per the vision 2030. In my budget program, the savings from spending cuts and tax increment reduced the deficit by 62% and 38% respectively. Tax increments raised revenue of $486 billion while government spending in the military, healthcare, social security and domestic programs saved $888 billion dollars (Carter, Ericson, Leonhardt, Marsh, & Quealy, 2010). The rationale used for the funding decisions was to reduce the government expenditure while increasing revenues through tax increments.

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What are some economic and political reasons why it is difficult to cut spending from the current high levels?

It is very difficult to cut spending due to both political and economic reasons. Politically, 49% of Americans translating to almost 150 million people benefit from government programs (Jennings & Zott, 2013). For instance, 49 and 80 million Americans rely on Social Security and Medicaid respectively. Therefore, cutting spending would affect a lot of voters hence, making it impossible to make the decision. Likewise, spending cuts reduce the economic activities of a nation, lowering the gross domestic product. Government spending provides the infrastructure and the policies required to promote business, investments and consumer spending.

What are some economic and political reasons why it may be difficult to increase taxes to raise revenues?

Economically, tax increment reduces the disposable income of the households, affecting their purchasing power parity, leading to a decline in spending. The consumer behavior of Americans contributes significantly to the gross national product. Therefore, an increase in taxes would slow down economic growth. Likewise, politics is government by the elites. Most of the politicians are within the 1% percent of the wealthiest people (Jennings & Zott, 2013). As a result, most of them are opposed to tax increase because it would also hurt their financial position.

How much of the budget deficit were you able to cut by 2030? If you were able to reach the 2030 figures what are the implications of your cuts economically and for you politically? If you were not able to reduce the budget deficit then, what are the implications of your decision economically and for you politically?

I managed to reduce the budget deficit by $1374 billion by 2030. Reducing the deficit is a significant milestone for the US economy since the federal government has been spending more than it gets in revenues. Therefore, on aggregate, the US taxpayers are saved from the tax incidence of burden for repaying the deficits. Politically, balancing the budget promotes an increased trust on the government, proving that separation of powers is an ideal model of democracy.

References

Carter, S., Ericson, M., Leonhardt, D., Marsh, B., & Quealy, K. (2010). Budget Puzzle: You Fix the Budget. Retrieved from http://archive.nytimes.com/www.nytimes.com/interactive/2010/11/13/weekinreview/deficits-graphic.html?_r=0%2520(Links%2520to%2520an%2520external%2520site.)Links%2520to%2520an%2520external%2520site.

Jennings, K., & Zott, L. M. (2013). The US Deficit. Farmington Hills, MI: Greenhaven Press.

Schroeder, R. (2017, October 20). U.S. Ends Fiscal 2017 with $666 Billion Budget Deficit. Retrieved from https://www.marketwatch.com/story/us-ends-fiscal-2017-with-666-billion-budget-deficit-2017-10-20