Reference no: EM132312365

If the President of the United States has been elected on the promise of fiscal responsibility as a key mandate of the electorae. 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

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.

Can you explain what steps he would have to take to achieve that and what role does monetary and fiscal policy play in this?