In regards to Government Budgets and Fiscal Policy.... Name three government bud

Question

In regards to Government Budgets and Fiscal Policy....

Name three government budget items – they should be all federal or all state items – that you think should receive more funding.

Why? How would they help the economy and/or society in general?

Where would the money come from? If you decided to raise taxes to get the additional funding, which ones/types listed in the book would you raise, and why? If you got the money instead by cutting other government programs, which would you cut, and why?

Explanation / Answer

The three budget items that need more funding are : -

1). Quality Education

2). Healthcare

3). Poverty Reduction Programmes

Quality Education should be the priority for any government to spend on. This is because better education will lead to not just better economic productivity, but also societal productivity. A more educated person will indulge in lesser crimes, and thus this could eventually lead the government to even reduce funding on Domestic Police, thereby using this money on Domestic Security on more productive activities.

Better healthcare would not just mean better productive citzens, but would also reduce the incidence of disease in the country. So, if there are good sanitary and healthcare conditions in the country, there will be less number of communicable diseases, and thus lesser number of people affected.

Poverty often perpetuates poverty. Thus, having efficient poverty reduction programme will prevent the countries from falling into a poverty trap, and thus help them lead a better life. People who have adequate amount of resources(both monetary and social) also tend to indulge less in societal crimes. Thus, poverty reduction programmes in a way will also help reduce the probabilty of societal crimes.

Taxes on wealth could be increased, instead of increasing taxes on merely incomes. This is because, taxing income often reduces the incentives of the individuals to work more and thus the total revenue collected by the government will eventually reduce.(Laffer's curve). Apart from this, it is believed that wealth discrimination is more prevelant in the society than income discrimination. Thus, taxing the wealthy individuals will also lead to equality in the society.

I would cut expenditure on Military. This is because this is one of the sectors where a lot of money gets wasted, without any tangible benefits to the society. Apart from this, military is one sector where rampant corruption and money laundering is very prevelant.

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