Reference no: EM133196567 , Length: 3 Pages

Assignment 1:

For this discussion activity, you will get insight into the federal budgeting process and how key allocation decisions are made. As part of that effort you will work through the National Budget Simulation in an effort to achieve a budget deficit of $1400B dollars.

Scenario: The President of the United States has been elected on the promise of fiscal responsibility as a key mandate of the electorate. By law he cannot reduce the net interest paid on the debt. The President's budget is projected to leave the country with a $1400B deficit.

The United States is subject to global security concerns tied to recent terrorist attacks both domestically and internationally. At the same time, a lingering recession and financial markets rescue package reduces the government's tax revenues and forces the government to increase its spending on unemployment benefits, welfare, housing assistance, food stamps, and other need-based programs. Because of the increased spending and reduced revenues, the nation falls into a projected deficit of nearly $X in 2020 (This is the first piece of the information you need to find).

The President is committed to keeping his campaign promises to avoid future crisis over the US's financial standing. He must raise taxes, cut spending, or a combination of both to stay within his new guideline of a deficit below $1400B. The President turns to you, his trusted economic advisor, for help. (Note: While some events in this scenario reflect actual events, others are hypothetical for the purposes of this exercise. Budget figures in the simulation are actual White House figures of 2012, including spending and revenues of 2012.)

So here are some hints to help point you in the right direction.

Play around with the simulator and try to get the deficit to $1400 billion. Make note of what you had to do to get the budget to (or near) that amount, and talk about what effect those changes would have on the economy.

The current deficit is $1090B, so to get the deficit to $1400B, you need to increase spending by $310B to $3850.2B. There are many ways to do this. Here's an example of one:

International Affairs +20%

General Science +20%

Energy +20%

Agriculture +20%

Community & Regional Development +20%

Education, et. al. +20%

Administration of Justice +20%

General Government +20%

Transportation by +5%

Health +10%

Veteran's Benefits +15%.

This got the deficit to $1399.6B

"The effect this would have on the broader economy is..."

Assignment 2: MINIMUM OF 150 words

For the Critical Thinking Exercise, you will review the options for reducing the deficit at and select two options. As part of that assessment, provide an explanation and synthesis of the potential impacts on the US economy tied to these austerity measures including sectors of the economy that would be affected.