Week 7 Discussion 2
From the e-Activity, provide three justifications for an increase to the four highest discretionary spending accounts.
Justification 1: Mandatory Spending eats up most of the budget. For example, Mandatory spending is the benefits provided by Social Security, Medicare and other programs established by prior Acts of Congress. It consumer nearly two-thirds of total spending. It’s estimated to come in at $2.543 trillion in FY 2016. Mandatory spending is skyrocketing, thanks to the huge number of Baby Boomers who are reaching retirement age. Social Security and Medicare benefits will grow from 28% of the budget in FY 1988, to 36% in FY 2016. They will consume 40% of the budget by FY 2024.
Justification 2: Interest Payments on the National Debt. One of the fastest growing expenses is interest payments on the national debt. In FY 2016, it will be $283 billion, or enough to pay for ten Justice Departments. By 2024, it will nearly triple to $785 billion, becoming the second largest budget item after Social Security. Enjoy government services now, because you’ll be paying for it in ten years!
Justification 3: Discretionary Spending. Discretionary spending pays for actually running the government. The President proposes spending $1.168 trillion in FY 2016. This is the only part of the budget that the President and Congress can debate each year. One thing they don’t argue about is the need for military spending. As a result, this consumes two-thirds of the discretionary budget. That means it’s greater than all other departments combined. True military spending is spread out among different agencies and budget categories.
From the e-Activity, provide three justifications for a decrease to the four highest discretionary spending accounts.
Justification 1: The recovery that followed the 2007-2009 financial crisis and recession has been relatively slow. Economic growth in the United States, however, has been faster in recent years than in many other advanced economies. Economic recoveries following major financial crises can be much less robust than recoveries following more cyclical downturns. Some continue to call for a more expansionary fiscal policy to respond to high unemployment levels, which would entail larger budget deficits in the short run. Other economists are skeptical that such fiscal policies would ameliorate deeper problems caused by high personal and federal debt levels, and therefore call for fiscal restraint as a first step towards addressing longer-term fiscal challenges, or at least a transition to a less expansionary fiscal policy.
Justification 2: When the Supercommittee failed to reach agreement on $1.2 trillion in additional cuts required in the Budget Control Act of 2011, this triggered sequestration. Sequestration is a series of automatic budget cuts totaling $1.2 trillion, including interest savings, over nine years, beginning on January 2, 2013. Sequestration imposes 50 percent of its reductions on defense, which represents only 17 percent of federal spending in 2013. Mandatory spending accounts for 64 percent of the budget in 2013, but receives only 15 percent of the sequestration cuts. Also, two of the largest spending programs, Social Security and Medicaid, are exempt from sequester savings, as is all but 2 percent of Medicare.
Justification 3: Anti-poverty spending provides benefits to poor and low-income individuals and families in the form of income, health aid, food stamps, and housing assistance. Anti-poverty spending surged by 49 percent, inflation-adjusted, since 2002. In addition, Support Payments to States and Temporary Assistance for Needy Families (TANF) dropped by 28 percent. TANF is a block grant and is not adjusted for inflation or caseload changes.
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