Project #160110 - Economics Discussion Response

Business Tutors

Subject Business
Due By (Pacific Time) 12/11/2016 10:30 pm

Discussion response/reply to 3 original post. 200 words per topic....APA format. Maximum of 1 page.  

In responding to the discussions and to other students, please be sure to use the course material using in-text citations and a reference list to cite the source(s) used.

(1) Discussion for Response to (JS)

The article I chose was Ignoring the Debt Problem written by Paul A. Volcker and Peter G. Peterson. While it was written before the outcome of the president race outcome I found still pretty relative especially considering the President Elect Trump still has yet to put out detail economic policy and just recently named his Treasury secretary. He campaigned on adding 25 million jobs over the next 10 years, growing GDP 3.5% per year, reform the tax system, new regulatory system, and “America First” trade policies. This are for the most part all very positive, I am still working how he plans on making good on these campaign promises. The article has some very compelling points about the short term and long implications of ignoring the national debt. The Congressional Budget Office has estimated that by midcentury our debt will rise to 140 percent of G.D.P., far above that in any previous era, even in times of war. If the national debt grows, and interest rates normalize, the interest burden alone would choke our budget and squeeze out other essential spending. They have proposed two solutions; gradual adjustments to the Social Security system that still maintain present benefit levels for those at or near retirement, with particular attention to those most in need and tax reform aimed at better incentives for economic growth, while raising more revenue, even as the code is simplified. While I might not entirely agree with Paul and Peter solutions they are some points certainly worth exploring and ignoring the problem is not an option. I just hope in the upcoming new year every politician in Washington DC new year’s resolution is to stop partisan politics and start listening to competing ideas as this problem worth crossing parties lines to working on addressing.  

 

http://www.nytimes.com/2016/10/22/opinion/ignoring-the-debt-problem.html?rref=collection%2Ftimestopic%2FFederal%20Budget%20(U.S.)&action=click&contentCollection=timestopics&region=stream&module=stream_unit&version=latest&contentPlacement=4&pgtype=collection

 

 

 (2) Discussion for Response to (SL)

At the end of November 2016, John Mauldin published an article in Forbes Magazine, in which he predicted a recession, then discussed the potential effect a recession would have on the federal budget.  The reasoning for predicting a recession was that there has been a recession after every two-term presidency and because the economy is hovering close to stagnation.  According to the U.S. Inflation Calculator, over the last four quarters (ending with the third quarter 2016), the inflation rate has ranged between 0.8 and 1.5%.   

Because of the current conditions, it is unlikely that the Federal Budget will be balanced in the coming years because fiscal policy that would likely be implemented (more government spending, less tax revenue) in the event of a recession will increase deficit and the national debt.  Taxes would have to be lowered, because as it stands tax revenue is flat even though there are jobs are going up, which indicates that jobs are paying lower wages.  Furthermore, the increased costs of social security payouts to seniors is about to skyrocket to levels that will not be covered by current revenues, which will add to a deficit and the national debt.  In fact, John Mauldin predicted that the national debt would rise by 50% by the end of Trumps first presidential term.   

The sustained high levels of deficits and increasing national debt, put the economy in a precarious position, which if it takes a turn for the worst, could require extreme measure that only worsen the deficit and debt problem.  

Mauldin, J. "We Are Putting Off The Inevitable" Forbes. Published on November 29, 2016.  Retrieved from http://www.forbes.com/sites/johnmauldin/2016/11/29/we-are-putting-off-the-inevitable/#615e61114660  

U.S. Inflation Calculator. "Historical Inflation Rates: 1914-2016." Accessed November 5, 2016. Retrieved from http://www.usinflationcalculator.com/inflation/historical-inflation-rates/  

 

(3) Discussion for Response to (CL)

BY REP. PAUL A. GOSAR (R-ARIZ.) - 04/02/15 08:00 AM EDT

I wish it were possible to obtain a single amendment to our constitution; I would be willing to depend on that alone for the reduction of the administration of our government to the genuine principles of its constitution. I mean an additional article taking from the federal government the power of borrowing.”—Thomas Jefferson, 1798

It’s understandable that many Americans have distrust with regard to Washington’s desire to rein in this insanity of the Federal Budget. After all, Congress has abysmal approval ratings (the most recent Real Clear Politics average is 17.7%), and a primary reason is its contribution to our massive national debt. In late 2014, America’s federal debt eclipsed $18 trillionThat amount of money is nearly incomprehensible for most Americans. It equates to over $150,000 for every American taxpayer. The power to borrow has brought the United States to the precipice of fiscal calamity, yet our government still continues to live beyond its means. While these may be just numbers on a page to some, they represent a grave threat to our country’s safety. In September 2011, then Joint Chiefs Chairmen Admiral Mike Mullen called our national debt—at that time $14 trillion—the biggest national security issue facing America.

Over the years, members of Congress have tried in vain to right our fiscal ship by introducing numerous balanced budget amendments, but unfortunately, there has never been enough agreement to make these efforts reality. The toxic, vitriolic environment in Washington has almost ruined any chance of balancing the budget through congressional action. Both parties have recklessly spent the people’s money, and there is no sign they will agree on a remedy to this madness anytime soon. 

Article V of the Constitution allows states to pass an amendment when three-fourths of them agree to do so. REP. PAUL A. GOSAR (R-ARIZ.) have recently introduced legislation that would facilitate this process through an Article V convention of the states. Using an agreement among the states called an “interstate compact,” H.Con.Res.26, Effectuating the Compact for a Balanced Budget, treats our nation’s spending problem as the constitutional crisis it is and advances a powerful balanced budget amendment.

His legislation initiates this agreement and ensures that the state-initiated constitutional amendment process advances a balanced budget amendment and nothing else. Possibly the most attractive feature of this innovative approach is that it does not require the president’s signature. And while the Compact does require congressional consent to work, such consent is achieved by simple majority passage of a resolution, which consolidates everything Congress must do into a turnkey process. This approach ensures this constitutional convention deals only with a balanced budget amendment, and includes the necessary safeguards to prevent a runaway convention of the states.

The Compact for a Balanced Budget Amendment currently has 15 cosponsors in the House and is endorsed by Americans for Tax Reform, the Cato Institute, and The Federalist Society. Four states—Alaska, Georgia, North Dakota, and Mississippi—have already passed legislation to join the Compact, and at least eight more have signaled they will follow suit. Momentum is building nationwide for this worthwhile effort.

Reference:   

Balancing the federal budget: A (not so) new approach | TheHill

thehill.com/.../237634-balancing-the-federal-budget-a-not-so-new-appro...

 

 

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