PART I Budget Deficits and Budget Surpluses (10 points) Step 1 A nation has a federal budget deficit if spends more than it collects in tax revenues A nation has a budget surplus if it spends less than it collects in tax revenues To find data on the current state of the U S federal budget please go to the Congressional Budget Office (CBO) website (link below) Scroll down to Table 1 1 from Chapter 1 https www cbo gov publication 57373 idTextAnchor003 Question 1 Last year the federal government's Total Revenues equaled $ billion, while their Total Outlays (spending) equaled $ billion Thus, the U S federal budget ran a total budget (Deficit Surplus) equal to $ billion Question 2 For this year , the CBO projects that the total budget deficit will (increase decrease) to a total of $ billion Step 2 Now look at the Historical Budget Data from the CBO's page here (Click above link and then the most recent period link under Historical Budget Data to access Revenues, Outlays, which should be the first link to an Excel file) Question 1 In 2001 , the U S economy went in recession and President Bush signed a tax cut law into effect As a result, during the 2001 2003 period, federal tax revenues (increased decreased) while federal outlays expenditures (increased decreased), thus causing the budget to move from a (surplus deficit) of $ billion in 2000 to a (deficit surplus) of $ billion in 2003 ( NOTE For the deficit surplus data, please use the data from the next to last column of the table ) Question 2 What happened to the deficit over the most recent three years Step 3 If you were a policymaker in Washington, D C attempting to reduce the federal budget deficit and balance the budget, which programs would you cut, which programs would you spend more on, and which taxes would you increase decrease To see the current budget situation in detail and to consider what it would take to balance the federal budget, please go to the budget simulator on the Committee for a Responsible Federal Budget website Read the information on the first page of the site When done with each page click on the Next icons Click on the i for more information about each possible choice Continue until you get to the page that gives you a done option When you finished making your budget changes, click on the done button to see your final results page IMPORTANT You must copy and paste your results page into the sheet you submit via Blackboard for this exercise Or, you can summarize in writing how you did and what the results page told you I expect to see your priorities for both taxation and spending Describe how you changed taxation and spending to help balance the budget here PART II The National Debt (10 points) Step 1 When the government runs a deficit, it must borrow money from the public (and some from government funds currently in surplus (e g the Social Security trust fund)) to pay for its excess spending Additional deficits in following years lead to a larger accumulation of debt The total amount owed by the government from years of overspending is called the national debt Question 1 Go to the Balance at https www thebalance com who owns the u s national debt 3306124 According to the data given there, the total Debt Held by the Public equals approximately $ trillion This is money owed to you and me (if we own Treasury securities), our pensions, foreigners, etc Question 2 Current surpluses in the Social Security Trust fund and other Government Trust Funds have been tapped to finance a significant fraction of this total debt (that is, the government is, essentially, writing itself an IOU to pay back these trust funds at a later date), so that the Intragovernmental Debt is approximately $ trillion Some of the major concerns raised about the U S debt including the increasing percent of the publicly held debt owned by foreigners and the large interest payments on the debt that mean we can't spend money on other social needs Question 3 According to the data provided on this site, foreign countries own $7 7 trillion of our now $23 5 trillion public debt, or approximately of the publicly held national debt is owned by foreigners, with the two largest holders of U S government Treasury securities being the countries of Foreign holdings of the public held U S debt are at historic levels (For more visual, thought a bit dated data, see current foreign ownership at https www thebalance com who owns the u s national debt 3306124 Question 4 One of the most important costs of our national debt is the interest payment that must be made each year on this debt Using data from 5 facts about the national debt Pew Research Center (scroll down to the 4 th fact), net interest on the publicly held debt are estimated to equal $ billion, roughly of the federal budget This spending on interest constitutes money that cannot be spent on other things (i e the opportunity cost) specifically, net interest on the debt typically totals more than the combined federal budget spending on energy, the environment, agriculture, veterans' benefits, and education Step 3 While the total debt number above are quite large, they are potentially misleading if taken out of context As an individual, you don't just look at the total amount of your debt, but rather the size of your debt relative to your ability to repay that debt this determines the burden of your debt In the U S , our national ability to support the debt is our national income, as measured by our nation's Gross Domestic Product (fact 2 from the Pew Research site above site gives historical perspective on this) Question 1 According to the Pew Research site (link above), the Publicly Held U S Debt as a percentage of U S GDP is estimated to equal Do you think this is still a rather manageable number How would this now compare to other nations' debt to GDP ratio (see https www cia gov the world factbook field public debt country comparison and determine where the US would rank if you update the figure from 2017 to 2020 (swap the CIA figure to the Pew figure) Consider the fact that the aging baby boomer population (along with relatively smaller groups of young workers) means, unless changed, the Social Security and Medicare systems will go from the current governmental trust fund surpluses into deficit ceteris paribus, this could lead to significantly larger debt burdens unless spending cuts or tax hikes are enacted Step 2 Familiarize yourself with the 2017 GOP Tax Reform bill See http www businessinsider com trump gop tax reform bill impact economy business debt income 2017 12http vop org for an overview, if you need one How do you think this will affect the national debt going forward and why What are your thoughts on the timing of this stimulus package, given where the economy was in the business cycle during 2017 What has this done to our ability to handle the spending stimulus passed to prop up the economy during the current crisis What do you predict will happen to our national debt in the coming years Step 4 Give me a summary of your reactions to what you learned by completing this assignment

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PART I: Budget Deficits and Budget Surpluses (10 points) Step 1: A nation has a federal budget deficit if spends more than it collects in

PART I: Budget Deficits and Budget Surpluses (10 points)

Step 1: A nation has a federal budget deficit if spends more than it collects in tax revenues. A nation has a budgetsurplus if it spends less than it collects in tax revenues. To find data on the current state of the U.S. federal budget please go to the Congressional Budget Office (CBO) website (link below). Scroll down to Table 1-1 from Chapter 1.https://www.cbo.gov/publication/57373#_idTextAnchor003

Question 1: Last year the federal government's Total Revenues equaled $____ billion, while their Total Outlays (spending) equaled $______ billion. Thus, the U.S. federal budget ran a total budget ________ (Deficit/ Surplus) equal to $ _____ billion.
Question 2: For this year, the CBO projects that the total budget deficit will __________ (increase / decrease) to a total of $______ billion.

Step 2: Now look at the Historical Budget Data from the CBO's page here.

(Click above link and then the most recent period/link under Historical Budget Data to access "Revenues, Outlays, ..." which should be the first link to an Excel file)

Question 1: In 2001, the U.S. economy went in recession and President Bush signed a tax cut law into effect. As a result, during the 2001-2003 period, federal tax revenues _________ (increased / decreased) while federal outlays/expenditures _________ (increased / decreased), thus causing the budget to move from a ________ (surplus / deficit) of $____ billion in 2000 to a _______(deficit / surplus) of $_____ billion in 2003.

(NOTE: For the deficit/surplus data, please use the data from the next-to-last column of the table.)

Question 2:What happened to the deficit over the most recent three years?

____________________________________________________________

Step 3: If you were a policymaker in Washington, D.C. attempting to reduce the federal budget deficit and balance the budget, which programs would you cut, which programs would you spend more on, and which taxes would you increase/decrease? To see the current budget situation in detail and to consider what it would take to balance the federal budget, please go to the budget simulator on the Committee for a Responsible Federal Budget website. Read the information on the first page of the site. When done with each page click on the "Next" icons. Click on the "i" for more information about each possible choice. Continue until you get to the page that gives you a "done" option.

When you finished making your budget changes, click on the "done" button to see your final "results" page.

IMPORTANT: You must copy and paste your results page into the sheet you submit via Blackboard for this exercise. Or, you can summarize in writing how you did and what the results page told you. I expect to see your priorities for both taxation and spending!

Describe how you changed taxation and spending to help balance the budget here:

_________________________________________________________________

PART II: The National Debt (10 points)

Step 1: When the government runs a deficit, it must borrow money from the public (and some from government funds currently in surplus (e.g. the Social Security trust fund)) to pay for its excess spending. Additional deficits in following years lead to a larger accumulation of debt. The total amount owed by the government from years of overspending is called the national debt.

Question 1:Go to the Balance at https://www.thebalance.com/who-owns-the-u-s-national-debt-3306124 According to the data given there, the total "Debt Held by the Public" equals approximately $_________ trillion. This is money owed to you and me (if we own Treasury securities), our pensions, foreigners, etc.
Question 2: Current surpluses in the Social Security Trust fund and other Government Trust Funds have been tapped to finance a significant fraction of this total debt (that is, the government is, essentially, writing itself an "IOU" to pay back these trust funds at a later date), so that the "Intragovernmental Debt" is approximately $_______trillion.

Some of the major concerns raised about the U.S. debt including the increasing percent of the publicly-held debt owned by foreigners and the large interest payments on the debt that mean we can't spend money on other social needs.

Question 3: According to the data provided on this site, foreign countries own $7.7 trillion of our now $23.5 trillion public debt, or approximately _____% of the publicly-held national debt is owned by "foreigners," with the two largest holders of U.S. government Treasury securities being the countries of ________ & _______. Foreign holdings of the public-held U.S. debt are at historic levels. (For more visual, thought a bit dated data, see "current foreign ownership" at https://www.thebalance.com/who-owns-the-u-s-national-debt-3306124
Question 4:One of the most important costs of our national debt is the interest payment that must be made each year on this debt. Using data from 5 facts about the national debt | Pew Research Center (scroll down to the 4^th fact), net interest on the publicly-held debt are estimated to equal $______ billion, roughly ___% of the federal budget. This spending on interest constitutes money that cannot be spent on other things (i.e. the opportunity cost); specifically, net interest on the debt typically totals more than the combined federal budget spending on energy, the environment, agriculture, veterans' benefits, and education.

Step 3: While the total debt number above are quite large, they are potentially misleading if taken out of context. As an individual, you don't just look at the total amount of your debt, but rather the size of your debt relative toyour ability to repay that debt - this determines the "burden" of your debt. In the U.S., our national ability to support the debt is our national income, as measured by our nation's Gross Domestic Product (fact 2 from the Pew Research site above site gives historical perspective on this).

Question 1: According to the Pew Research site (link above), the Publicly-Held U.S. Debt as a percentage of U.S. GDP is estimated to equal ____%. Do you think this is still a rather manageable number? How would this now compare to other nations' debt-to-GDP ratio? (see https://www.cia.gov/the-world-factbook/field/public-debt/country-comparison/ and determine where the US would rank if you update the figure from 2017 to 2020 (swap the CIA figure to the Pew figure). Consider the fact that the aging baby-boomer population (along with relatively smaller groups of young workers) means, unless changed, the Social Security and Medicare systems will go from the current governmental trust fund surpluses into deficit; ceteris paribus, this could lead to significantly larger debt burdens unless spending cuts or tax hikes are enacted.

Step 2:Familiarize yourself with the 2017 GOP Tax Reform bill. See http://www.businessinsider.com/trump-gop-tax-reform-bill-impact-economy-business-debt-income-2017-12http://vop.org/ for an overview, if you need one. How do you think this will affect the national debt going forward and why? What are your thoughts on the timing of this stimulus package, given where the economy was in the business cycle during 2017? What has this done to our ability to handle the spending stimulus passed to prop up the economy during the current crisis? What do you predict will happen to our national debt in the coming years?

_________________________________________________________________

Step 4:Give me a summary of your reactions to what you learned by completing this assignment. __________________________________________________________

_______________________________________________________________________

______________________________________________________________________________________________________________________________________________________________________________________________________________________.