ANALYSIS, COMMENTS, THOUGHTS, AND OTHER OBSERVATIONS IN DR. SKOSPLES' NATIONAL INCOME AND BUSINESS CYCLES COURSE AT OHIO WESLEYAN UNIVERSITY
Sunday, February 14, 2010
What's Sustainable About This Budget?
Obama's 2011 budget bears the title A New Era of Responsibility. His overall goal in the new budget is to invest in our people without leaving them a mountain of debt. He addressed his politicians by saying Let’s meet our responsibility to the citizens who sent us here. The real question is if this strategy is realistic. War is a huge issue as far as the national budget is concerned. Wars lead to temporary surges in government spending, and recessions lead to temporary declines in government revenue. It makes sense for the government to borrow to make it through these tough times. Obama is dealing with both of these issues, war and recession. It is natural to see our country in a deficit because the war is expensive and with the current circumstances there will evidently be a deficit. As a result, the governments budget will grow faster than the economy.
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The whole budget situation sounds pretty bleak, and if these article's forecasts are right, we will end up in a mountain of debt.
ReplyDeleteThe value added tax sounds like it would help solve the deficit problem, but middle-class consumers may again be the ones paying for it.
Alternatives to the VAT that might work better could be the government spending freeze, ending the war in Iraq, and taxes on banks' excess reserves.
~Cassie