What would be a response/comment to the answer given of the question 2 and three

Question

What would be a response/comment to the answer given of the question 2 and three. Comes from Try your hand at stabilizing the U.S. debt by using Committee for a Responsible Federal Budget Simulation at http://crfb.org/stabilizethedebt/. Read through the “Intro” and click “Next” in order to follow the simulation instructions. Answer the following questions once you have completed the simulation:

1. Were you successful in stabilizing the U.S. debt? If not, how much of a deficit or surplus did you end up with? What does this exercise tell you about the process of creating a budget plan?

Yes, I was successful in stabilizing the U.S. debt. I did not end up with a deficit or surplus because O successfully stabilized the U.S. debt. I reduced the debt by 60% of GDP in 2020 and kept a sustainable level through 2030. This exercise has enabled me to understand the process of creating a budget plan. I realized to create a budget plan an individual requires to write the financial goals, record every single purchase, create spending categories, hold a budget meeting, scheduled time to create the budget and tweak the budget at the beginning of every period.

2. Re-examine the budget cuts or increases you made. What problems would such changes pose for a politician facing reelection?

I made several budget cuts in various categories to reduce the debt to 60% if the GDP in 2024 and keep it at a sustainable level through 2030. Some of these categories included the budget path, defense, domestic, social security, healthcare, Revenues, other spending, and tax expenditure. As a politician, most of these issues would make me not re-elected if I was a politician. The budget path and healthcare were some of the categories that I increased with the greatest margin. These two issues directly affect my electorates. I, therefore, face a mammoth task in being re-elected if I stabilize the U.S. debt by making the changes.

3. This budget simulator allows you only to change spending and tax expenditures over a one-year period. This poses what problems to finding a realistic economic solution?

Yes, this simulator only allows the changing of spending and tax expenditure over a one-year period. It does not factor other issues like changes in the world economy, climatic condition, and the global economy. It does not factor inflation and the interest rates. It is, therefore, difficult to find a realistic economic solution.

Explanation / Answer

2. You have pointed out to a right direction. To reduce debt govt budget must be lower in a manner that GDP is not harashed. Let you have reduced debt along with reduction in GDP then it is possibility that % of debt is same as before.

Therefore there are many option to fullfill the purpose. If yopu don't want to increase tax then you can choose to sell government bond to collect extra money. There is a poroblem associated with spending cut ortax raising which you have observed. Not only plotical presure there is a chance of demand deficit. As Government reduces its spending or raising tax it may affect the economy adversely by reducing demand. So you have to keep it in your analysis.

3. The solution which You have posed is valid only for one year period. From period to period observing global economic condition, climatatic condition and other factors that affect your GDP, You have to take proper policy to proper margin. But your answer is true for that period in a ever changing economy.

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.