1. If the federal government were required by law to balance its budget, how would such a law impact our response to the current recession? (Minimum 50 words)

See over for data that will help inform your analysis.

The data presented here has been retrieved from the following federal government sources:

The OMB (Office of Management and Budget)

The CBO (Congressional Budget Office)

The Federal Reserve of St. Louis

Table I*

YEAR	Federal Receipts as % of GDP	Federal Outlays as % of GDP	Budget Surplus or Deficit as % of GDP	Federal Debt as % of GDP
2000	20%	17.7%	+2.3%	54%
2008	17.1%	20.2%	-3.1%	74%
2016	17.6%	20.8%	-3.2%	105%
2019	16.3%	21%	-4.6%	107% (in 2020 this is now 136%)

Table 2*

YEAR	Mandatory Expenditures as % of Budget	Defense Discretionary Expenditures as % of Budget	Non-Defense Discretionary Expenditures as % of Budget	Interest Payments on the Federal Debt as % of Budget
1993	48%	21%	17%	14%
2018	61%	15%	15%	8%
2025 (Projected)	64%	15%	11%	10%

Some numbers have been rounded.

Average Economic Growth rate for the US economy over the last ten years is just under 2.5%

Federal Budget Categories:

• In FY 2019, the federal government spent $4.4 trillion, which amounts to 21% of GDP.
• Only $3.5 trillion was financed by federal revenues and the remaining amount was financed by borrowing.

What the $4.4 trillion was spent on (some numbers are approximations):

MANDATORY SPENDING:

23% ($1 trillion) Social Security:

45 million receive retirement benefits, 10 million receive disability benefits.

25% ($1.1 trillion) Medicare, Medicaid, CHIP:

$651 billion on Medicare (61 million beneficiaries)

$400 billion on Medicaid and CHIP (82 million low-income seniors and children)

$56 billion on ACA subsidies (9.6 million beneficiaries)

8% ($361 billion) Safety Net Programs:

Such as food stamps, EITC, housing subsidies. It is estimated that these programs have kept 37 million people above the poverty line and that without these programs, our poverty rate would be around 24% instead of just below 13%.

8% ($375 billion) Interest payment on the National Debt

DISCRETIONARY SPENDING:

16% ($700 billion) National Defense

8% benefits for veterans and federal retirees.

2% Transportation Infrastructure

2% Education

2% Science and Medical Research

Includes scientific research, medical research, space programs, the EPA, Interior dept, National Parks service, Department of Energy

1% Non-security International including diplomatic efforts (State Department) and foreign aid.

4% All other government functions Including law enforcement (FBI, CIA, DHS), justice system, general government operations.