•YOU SOLVE THE DEFICIT PROBLEM •FOR THE BASIS OF THIS PAPER YOU ARE THE PRESIDENT, CONGRESS AND THE FEDERAL RESERVE ALL ROLLED INTO ONE. THE TOTAL COUNTRY DEPENDS ON YOU TO SOLVE THE BUDGET DEFICIT PROBLEM, IF YOU CAN. THERE ARE NO RIGHT OR WRONG ANSWERS; THERE ARE ONLY PRIORITIES. •TASKS •(YOU ARE TO DO THIS INDIVIDUALLY AND NOT AS A TEAM). •YOU ARE TO SUBMIT THE PAPER ELECTRONICALLY via email to the instructor, and post your entry in the discussion section. •UTILIZE THE SPREADSHEET THAT IS PROVIDED (Budget Deficit Spreadsheet) AND THE DESCRIPTION OF THE CATEGORIES IN THE SUPPORT FILE. •MAKE A COPY OF YOUR OWN SPREADSHEET. •FILL IN THE SPREADSHEET: IF YOU PICK A LINE ITEM CATEGORY, THEN FILL IN THE APPROPRIATE SAVINGS FOR 2020 AND 2030. YOU MUST USE THE TOTAL NUMBER FOR THE YEAR CATEGORY. FOR EXAMPLE, IF BY CUTTING FOREIGN AID IN 2020 YIELDS A SAVINGS OF $17 BILLION, THEN YOU MUST USE THE TOTAL NUMBER. •THE SPREADSHEET WILL AUTOMATICALLY CALCULATE YOUR PERCENTAGES AND SAVINGS VARIANCE. •SEE EXAMPLE IN THIS PACKAGE
budget_deficit_project__1_.docx
ny_times_spreadsheet__1_.xls
budget_deficit_project_instructions.ppt
Unformatted Attachment Preview
Budget Deficit Project (Detail/Background Information)
Spending Reductions
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
Cut foreign aid in half. Money spent helping other countries
Eliminate earmarks. Lawmaker-directed support of local projects.
Eliminate farm subsidies. Most go to large industrial farms, not small farmers.
Cut pay of civilian federal workers by 5%.
Reduce the federal workforce by 200,000. All departments.
Cut 250,000 government contractors. All departments.
Other cuts to the federal government. Includes eliminating some agencies, cutting research
funds for fossil fuels, reducing funds for the Smithsonian and the National Park Service,
eliminating certain regional subsidies.
Cut aid to states by 5%. Cuts to education, drug programs, and public safety.
Reduce nuclear arsenal and space spending. Reduce warheads and future research.
Further reduce troops in Asia and Europe. Assumes current Iraq and Afghanistan levels.
Reduce Navy and Air Force fleets. Less planes and ships. Reduce future expansion
Cancel and delay some weapons programs. Also reduce military research spending.
Reduce noncombat military compensation and programs. Would reduce health benefits for
military not injured in combat; reduce number of tours.
16. Enact medical malpractice reform. Many doctors believe so-called defensive medicine—
ordering tests and procedures to avoid lawsuits—is a major reason health costs are so high. This
option would begin to reduce the chances of large malpractice verdicts, and supporters believe, also
reduce rising medical costs. Opponents say it could reduce doctors’ incentives to avoid errors. The
savings estimate comes from the Congressional Budget Office.
17. Increase Medicare eligibility age to 68. Currently 65, and in some cases 62.
19. Reduce the tax break for employer-provided health insurance. Increases allowed would be at
the rate of economic growth, not health cost increases.
20. Cap Medicare growth starting in 2018. Medicare expenditures are capped at: growth in GDP
+1%. This would crack down on hospitals and doctors with the highest costs.
21. Raise the Social Security retirement age until 68. People would work longer and pay more
payroll taxes; likewise, benefits would be reduced.
23. Reduce Social Security benefits for those with high income. Workers above the 60th percentile
in income would have their benefits increase at the wage rate rather than at the rate of inflation.
Thus, long-term benefits would be lower.
24. Tighten eligibility for SSI disability. Reduce disability funding by 5%.
25. Use an alternate measure for calculating inflation for Social Security benefits. Use some
measure that is lower than the consumer price index.
Tax Increases
26. Estate tax exemption for the first $2 million only. Current law provides an exemption up to $5
million. This is an inheritance tax.
27. Increase the capital gains tax for households making above $250,000 a year. Currently it is
15%; increase to 20%. Capital gains are untaxed for couples earning $68,000 or less.
28. Return capital gains tax to Clinton-era levels. 10% tax on low-income households; 20% for
everybody else. Dividends would be taxed as ordinary income.
31. Payroll tax increase. Wages are not taxed after $106,000 a year. Remove the ceiling and tax all
wages. This is the Social Security tax.
32. Millionaire’s tax on income above $1 million. A 5.4% surtax on income above $1 million.
33. Eliminate loopholes, reduce tax rates. Eliminate all loopholes except, children deduction,
earned-income tax credit and home mortgages. Eliminates all corporate subsidies. In addition,
reduce the corporate tax to 28% (from 35%) and cut individual income taxes. Note: this yields
positive government revenue due to the size of existing subsidies.
34. Same as 33, only do not reduce tax rates.
35. Reduce mortgage deduction and other deductions for high-income households.
36. National Sales Tax. This would impose a 5% tax on all consumption except education, housing
and charitable giving.
37. Border Tax on imports. Place 2.5% tax on imported goods from all countries, including NAFTA.
38. Excise Tax on Gasoline. $1 / gallon federal tax on gasoline price in all 50 states.
39. Carbon Tax. This tax would be applied against CO2 emissions at $23 per ton of CO2. The tax
would be increased at the rate of inflation every year.
40. Profit repatriation tax. Allow companies to return overseas profits with one-time tax adjustment
of 5%.
41. Bank Tax. This option would tax banks based on the size of their holdings and the perceived
riskiness of those holdings. Larger, risker banks would pay more tax, both to discourage them from
taking big risks and to help cover the costs of future financial crises.
ECN5021
Federal Budget Deficit Project
Note: This is not an exhaustive list. If you have other ideas then state them
in your paper. They do not have to be quantified.
DOMESTIC PROGRAMS AND FOREIGN AID SPENDING (Multiple)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
Cut foreign aid in half
Eliminate earmarks
Eliminate farm subsidies
Cut pay of civilian federal workers by 5%
Reduce the federal workforce by 10%
Cut 250,000 government contractors
Other cuts to the federal government
Cut aid to states by 5%
MILITARY
Reduce nuclear arsenal and space spending
Further reduce troops in Asia and Europe
Reduce Navy and Air Force fleets
Cancel or delay some weapons programs
Reduce noncombat military compensation and overhead
Foreign Troop Levels: Choose One Or None
Reduce the number of troops in Iraq and Afghanistan to 6,000 by 2020
Reduce the number of troops in Iraq and Afghanistan to 3,000 by 2020
HEALTH CARE
Enact medical malpractice reform
Medicare Costs: Choose One Or None
Increase the Medicare eligibility age to 68
Increase the Medicare eligibility age to 70
Reduce the tax break for employer-provided health insurance
Cap Medicare growth starting in 2018
SOCIAL SECURITY
Changing The Retirement Age: Choose One Or None
Raise the Social Security retirement age to 68
Note: 2016 Deficit was $587 billion
Savings to Deficit
2020 FY
2030 FY
In Billions ($)
Savings to Deficit
Your Choice
Savings to Deficit
Your Choice
17
14
14
14
12
17
30
29
17
14
14
17
15
17
30
42
19
10
19
19
15
38
25
24
18
30
1
2
3
6
8
13
8
8
41
29
56
104
157
562
13
71
22
23
24
25
Raise the Social Security retirement age to 70
Reduce Social Security benefits for those with high incomes
Tighten eligibility for SSI disability
Alternate measure for inflation adjustment for SS
13
6
9
21
247
54
17
82
12
20
10
32
54
172
50
24
46
115
252
100
50
75
136
25
95
175
315
54
41
15
130
40
50
20
25
75
30
145
71
5
40
50
TAX PROPOSALS
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
Modifying Estate Taxes
Reduce Estate Tax exemption to $2 million
Investment Taxes: Choose One Or None
Capital gains tax increased to 20%
Retrun capital gains tax to Clinton-era levels
Increase income tax by 2% for households above $250,000 a year
Increase income tax by 2% on all households.
Payroll tax: Subject some incomes above $106,000 to tax
Closing Tax LoopHoles: Choose One Or None
Millionaire’s tax on income above $1 million
Eliminate loopholes, reduce rates
Eliminate loopholes, but keep taxes slightly higher
Reduce mortgage deduction and others for high-income households
Other Tax Options (Allowed to choose multiple)
National sales tax
Border Tax on Imports (net of export subsidies)
Excise Tax on Gasoline –$1 per gallon
Carbon tax
Profit repatriation tax (without spending for infrastructure)
Cap Medicaide at 2018 Levels
Bank Tax
TOTAL
Percent
0 Percent
Tax Increases
#DIV/0!
0
#DIV/0!
Spending Decreases
#DIV/0!
0
#DIV/0!
Projected Budget Deficit
670
Your Proposal o/(u) Deficit
(670)
The projected deficit is a result of CBO estimates prior to the implementation of any of President Trump’s proposals.
Your Spreadsheet Summary Here. Copy and Paste to your paper.
TOTAL
0
0
0
1,250
(1,250)
Did You Fix the Deficit Problem? (Keep solution answer)
What is your shortfall / surplus?
Percentage Tax Increases
Percentage Spending Decreases
Yes
No
Yes
No
Savings to D
2015
In Billion
1
2
3
4
5
6
7
8
DOMESTIC PROGRAMS AND FOREIGN AID
Cut foreign aid in half
Eliminate earmarks
Eliminate farm subsidies
Cut pay of civilian federal workers by 5%
Reduce the federal workforce by 10%
Cut 250,000 government contractors
Other cuts to the federal government
Cut aid to states by 5%
Savings to Deficit
17
14
14
14
12
17
30
29
In the example above: the student wanted to Cut foreign aid in half and
Cut aid to states by 5%
REMEMBER: YOU HAVE AN OPPORTUNITY TO PICK THE CATEGORIES YOU WANT;
BUT, PICK THE EXACT SAVINGS NUMBER.
SOME OF THE CATEGORIES ONLY ALLOW FOR PICKING ONE ALTERNATIVE.
SEE: MEDICARE COSTS BELOW
1
2
3
4
Medicare Costs: Choose One Or None
Increase the Medicare eligibility age to 68
Increase the Medicare eligibility age to 70
Reduce the tax break for employer-provided health insurance
Cap Medicare growth starting in 2018
8
8
41
29
Savings to Deficit
2015
2030
In Billions ($)
Your Choice
Savings to Deficit
29
8
17
14
14
17
15
17
30
42
56
104
157
562
Your Choice
17
42
104
Budget Deficit Project
•
•
•
LO1
YOU SOLVE THE DEFICIT PROBLEM
FOR THE BASIS OF THIS PAPER YOU ARE THE PRESIDENT, CONGRESS AND THE
FEDERAL RESERVE ALL ROLLED INTO ONE. THE TOTAL COUNTRY DEPENDS ON
YOU TO SOLVE THE BUDGET DEFICIT PROBLEM, IF YOU CAN. THERE ARE NO
RIGHT OR WRONG ANSWERS; THERE ARE ONLY PRIORITIES.
TASKS
• (YOU ARE TO DO THIS INDIVIDUALLY AND NOT AS A TEAM).
• YOU ARE TO SUBMIT THE PAPER ELECTRONICALLY via email to the instructor, and
post your entry in the discussion section.
• UTILIZE THE SPREADSHEET THAT IS PROVIDED (Budget Deficit Spreadsheet) AND
THE DESCRIPTION OF THE CATEGORIES IN THE SUPPORT FILE.
• MAKE A COPY OF YOUR OWN SPREADSHEET.
• FILL IN THE SPREADSHEET: IF YOU PICK A LINE ITEM CATEGORY, THEN FILL IN
THE APPROPRIATE SAVINGS FOR 2020 AND 2030. YOU MUST USE THE TOTAL
NUMBER FOR THE YEAR CATEGORY. FOR EXAMPLE, IF BY CUTTING FOREIGN
AID IN 2020 YIELDS A SAVINGS OF $17 BILLION, THEN YOU MUST USE THE
TOTAL NUMBER.
• THE SPREADSHEET WILL AUTOMATICALLY CALCULATE YOUR PERCENTAGES
AND SAVINGS VARIANCE.
• SEE EXAMPLE IN THIS PACKAGE
12-1
Budget Deficit Project
•
(1) WHEN COMPLETED, SAVE AND PRINT THE SPREADSHEET SUMMARY WITH
INFORMATION BELOW. THIS INFORMATION WILL BE USED IN YOUR WRITTEN
PAPER.
• YOUR NUMERIC SOLUTION ON SOLVING THE DEFICIT FOR 2020 AND 2030. DID
YOU FIX THE PROBLEM? WHAT IS THE SHORTFALL / SURPLUS?
• FOR 2020 AND 2030, HOW MUCH WAS DONE THROUGH TAX INCREASES AND
HOW MUCH FROM SPENDING CUTS—IN PERCENTAGE TERMS.
LO1
12-2
Budget Deficit Project
•
(2) WRITE A SHORT PAPER ON (NO MORE THAN TWO PAGES):
•
•
•
•
•
•
SUMMARIZE THE THREE MOST IMPORTANT FACTORS THAT MADE A DIFFERENCE
IN YOUR SOLUTION.
DISCUSS ANY SOCIAL IMPLICATIONS IN THIS SECTION.
DISCUSS THE ECONOMIC IMPLICATIONS OF IMMEDIATELY IMPLEMENTING THE
PROPOSALS THIS YEAR. CLUES: EMPLOYMENT, INFLATION, ECONOMIC GROWTH,
ETC.
WHAT ADDITIONAL FACTORS WOULD YOU LIKE TO SEE IN THE ALTERNATIVES
THAT WERE PROVIDED? DO YOU HAVE OTHER IDEAS?
DO YOU THINK YOUR PLAN WOULD EVER BE APPROVED? AND EXPLAIN WHY.
POST ON THE DISCUSSION BOARD (BOTH YOUR PAPER AND SPREADSHEET)
Example of Spreadsheet
Note: 2016 Deficit was $587 billion
Savings to Deficit
2020 FY
2030 FY
In Billions ($)
Savings to Deficit
Cut foreign aid in half
Eliminate earmarks
Eliminate farm subsidies
Cut pay of civilian federal workers by 5%
Reduce the federal workforce by 10%
Raise the Social Security retirement age to 70
Reduce Social Security benefits for those with high incomes
Tighten eligibility for disability
Use an alternate measure for inflation
Your Choice
17
14
14
14
12
13
6
9
21
Modifying Estate Taxes
Reduce Estate Tax exemption to $2 million
Investment Taxes: Choose One Or None
Capital gains tax increased to 20%
Retrun capital gains tax to Clinton-era levels
Increase income tax by 2% for households above $250,000 a year
Increase income tax by 2% on all households.
Payroll tax: Subject some incomes above $106,000 to tax
Closing Tax LoopHoles: Choose One Or None
Millionaire’s tax on income above $1 million
Eliminate loopholes, reduce rates
Eliminate loopholes, but keep taxes slightly higher
Reduce mortgage deduction and others for high-income households
Other Tax Options: Choose One Or None
National sales tax
Border Tax on Imports (net of export subsidies)
Carbon tax
Profit repatriation tax (without spending for infrastructure)
Cap Medicaide at 2018 Levels
Bank Tax
Savings to Deficit
Your Choice
17
14
14
17
15
247
54
17
82
14
14
14
12
12
20
10
32
54
172
50
24
46
115
252
100
172
50
75
136
25
95
175
315
54
41
5
40
25
15
25
75
10
71
5
30
50
17
15
247
54
100
TOTAL
TOTAL
Percent
226 Percent
433
Tax Increases
76.11%
172
23.09%
100
Spending Decreases
23.89%
54
76.91%
333
Projected Budget Deficit
670
1,250
Your Proposal o/(u) Deficit
(444)
(817)
The projected deficit is a result of CBO estimates prior to the implementation of any of President Trump’s proposals.
Your Spreadsheet Summary Here:
Did You Fix the Problem?
What is your shortfall / surplus?
Percentage Tax Increases
Percentage Spending Decreases
Yes
No
Yes
No
…
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