In this article, Stephen Anthony urges the government to "cut hard, and cut early on in your term". This is a contractionary fiscal policy, and helps balance the budget. He says specifically that he would like to see the family tax benefit income test lowered. Basically, people will feel the difference, rather than other programs. He says it is this important to balance our national budget.
I thought this concern raises two major issues. One, is it really possible for a politician to cut programs at the beginning of their term. With our current political system, cutting programs doesn't allow for re-election. Also, targeting areas of the programs, some economists say it will hurt those who are already hurting. I am not sure specifically where government programs would be helped or hurt, but I know cutting a program isn't necessarily easy.
On the other hand, cutting programs is a better political strategy than raising taxes. We saw this during the Clinton administration.
Do you think cutting programs is politically possible to balance a budget?
Where would you target the cuts?
http://www.abc.net.au/news/2014-04-14/government-should-target-seniors-familes-budget-cuts-economists/5387174
I think that this person is right. The reason the country is going broke is not because we are helping poor people. Rather, it is because we are giving large-scale entitlements to people who could otherwise afford it or should cover the costs themselves. For example, the child tax credit. Those should not be going to people making large amounts of money because they can afford the child either way. Low-income people should get those benefits up to the second child only; otherwise there is some moral hazard involved. These cuts make sense, but it takes some political bravery to do so.
ReplyDeleteI completely agree that our government needs to get the budget under control. Fiscal policy can be an effective tool for lessening the impact of economic downturns but from what we have covered in class, that is only acceptable in the short run. Eventually, running constant budget deficits will severely harm long-term growth. Rather than taxing the socks off of the American people, it is much better to make the government very efficient like any business or consumer has to be. This would allow the budget to come in balance while still giving us some "wiggle room" if the government steps in to fix another short-run problem (without falling into further deficits)
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