2. Fiscal Policy Read the following excerpt from President Obama's "Remarks by the President in the State of the Union Address" from February 2013: "Over the last few years, both parties have worked together to reduce the deficit by more than $2.5 trillion - mostly through spending cuts, but also by raising tax rates on the wealthiest 1 percent of Americans. As a result, we are more than halfway towards the goal of $4 trillion in deficit reduction that economists say we need to stabilize our finances." a) Which deficit is President talking about? Could a tax rate increase cause the deficit to increase, rather than decrease? "Yes, the biggest driver of our long-term debt is the rising cost of health care for an aging population. And those of us who care deeply about programs like Medicare must embrace the need for modest reforms - otherwise, our retirement programs will crowd out the investments we need for our children and jeopardize the promise of a secure retirement for future generations." b) Why an increase in government spending on retirement programs may crowd out the investment for future generations? c) How would increase in the cost of Medicare affect national