2. When the United States Senate voted to approve its momentous tax-reform bill early Saturday morning, it did so despite numerous analyses that have suggested the revenue lost to the bill’s tax cuts is unlikely to be made up by economic growth. Forty-nine of the 50 states are required to balance their budgets. Balancing the government’s budget sounds logical, as a matter of fact, that is the task of most Americans. Discuss. If it the government does not balance its budget, the stock market could crash. With the government’s lack of properly handling their finances it is not surprising that individuals follow their lead with large amounts of debt. I may have to approach this from a personal financial view. But the notion that the federal government should always aim for a deficit of zero has little if any economic rationale. Those benefits have to be paid regardless of the budget availability. For many decades, going back to the 1930s, various legislators have put forward proposals to require that the U.S. government balance its budget every year. 3. So, even though a deficit doesn’t necessarily hurt the economic power of the country, it would be best to balance the budget for long-term effects. If the government increased the taxes, that would decrease income. As a result, deficit is happening. Should the government balance its budget? Balanced budget could allow for debt during recession/war. These things can thing lead to other detrimental issues such as high crime, homelessness, crowded jails etc. “Requiring budget balance would upend current operating procedure, with effects too uncertain to predict reduced output variability.”Response: Disagree, Austan Goolsbee, Chicago Booth Several proposed amendments to the U.S. Constitution would require a balanced budget, but none have been passed. In U.S. there are two ways to balance its budget: collect more or cut the spending. Dec 06, 2017. Government incomes is generated from taxes, fees, and business revenue. Company Registration No: 4964706. Even if the government has run with a deficit for years, that doesn’t mean it will be able to continue that way. Even with modest-sized deficits, it’s possible to stabilize or reduce the debt as a share of gross domestic product, which is the best measure of sustainability over the long run. The government should be no different. At this point with the national debit being as high as it is I would have to say a firm no that I do not think that the federal government should have to balance their budget. Theses entities are main focal points around the world which dictate or explain the financial state of society. by Laura Porter – Saturday, August 2, 2014, 4:06 PM. “If we were dumb enough to force ourselves to cut spending/raise taxes in the middle of recessions, who’s to say (the) world wouldn’t RAISE rates?”Response: Strongly Disagree, Robert Hall, Stanford Without a budget not only will the reputation of the US government will be affected, but jobs as well. I agree. A requirement that the federal government balance its budget or begin paying down the debt is easier to grasp but would impose far more deficit reduction than the economy needs or could bear. The American government is in debt no doubt and a balanced budget is not going to solve the problem any faster. Economics 3. Managing the budget assures the economic state of our country is intact and prevents a complete failure our government system. by Tao Lu – Friday, August 1, 2014, 3:29 PM. Copyright © 2003 - 2020 - UKEssays is a trading name of All Answers Ltd, a company registered in England and Wales. Many US lawmakers have long voiced concern about the country’s growing debt and the regularity with which the federal government runs its annual budget at a deficit, and some have even suggested the US Constitution be amended to require that the federal budget remain in balance. Even though there has been a budget deficit in the United States for years, that doesn’t mean that it can go on forever. I don’t even think that is actually possible to balance the federal government’s budget on a yearly basis. It depends on the situation. by Laura Porter – Saturday, August 2, 2014, 4:45 PM. This would cause a financial crisis. Straight-jacketing the government is a mistake. It should not be treated as authoritative or accurate when considering investments or other financial products. “Fiscal impact lowers interest rates, but turmoil impact would raise. 11th Oct 2017 Will the US need to expand testing before lifting lockdowns? Such an amendment would … That unfortunately is not the realistic case for America at this time. It applies to both personal and business. Policymakers don’t need to balance the budget every year to put the budget on a sustainable path. I understand that if the government has to always balance its budget than lowering government spending will be expected. *You can also browse our support articles here >. Edward Glaeser. I agree with you. All things in life need to be managed at some point to be proven effective. Avoid increasing tax to businesses may help them to develop more projects and ending up helping the economy. by Tracy Vaughn – Tuesday, August 5, 2014, 9:06 PM. Now the U.S. is in debt and most of its payment goes to the interest. This could cause a domino affect from the stock market crashing to bad market to a recession and later depression. Large, long-term deficits are harmful. ALL RIGHTS RESERVED. Back to the question, it’s good to balance its’ budget but it shouldn’t required to “always”. Free resources to assist you with your university studies! The federal government should do it’s best to decrease its deficit (e.g. Any information contained within this essay is intended for educational purposes only. The most important piece, the balanced-budget amendment, should be a no-brainer. Should the ECB prioritize jobs and the environment? In other words, balancing the budget could result to wiser spending decisions. Tiffany Allen – Tuesday, August 5, 2014, 11:19 PM. would add a budget rule to the Constitution that would require federal spending not to exceed federal receipts Under which conditions can budget deficit be justified? Aug 1st, 2011: "Any federal balanced-budget amendment should allow the government to spend more than it collects in taxes during wars and recessions, with the understanding that it will spend less during peaceful times of plenty. If the existing condition or the environment is not right it could do more harm to a bad situation than help. Bloomberg. Even if policymakers passed such legislation tomorrow, they could not bind their successors to it. You made an excellent point about the multiple ways that there are to balance a budget. The US Constitution has never required a balanced budget over any time frame, and most pieces of federal legislation aimed at reducing or eliminating deficits target periods longer than one year, so as to take economic cycles into account. Re: Discussion Topic 5: Should the government be required to always balance its budget? Why or why not? For example; stock markets, GDP, and world trade, etc. While the intention of the government to create more jobs and stimulate economy by spending more is welcoming on one hand, the government should also consider our future generations and retirees and do a better job at balancing the budget. Financial Planners suggest that a family should save 10%, tithes 10% and the other 80% is to purposefully be used for sustaining your life style that you have created. I believe that keeping the budget balanced will help the government to properly allocate funds to different sectors determined by their importance. Most people in the United States are familiar with balancing a budget because they have had to perform that task once in their adult life and it was not easy. If the government decreased its spending, that also decreases the poor income and consumer’s consumption indirectly. As a result, government interest rates remain relatively low. If you need assistance with writing your essay, our professional essay writing service is here to help! Despite its reliance on a number of very controversial spending cuts, the better government plan necessarily depends heavily on revenue increases to achieve balance in 2014. by Olutobi Osinowo – Tuesday, August 5, 2014, 10:06 PM. I think that the government should always balance its budget. Cut the spending means people will get less benifit, there will be less federal employees to do work. If no budget is in place, overspending and potential bankruptcy is sure to occur. Balanced Budget Suddenly Looks More Appealing." spending less in defense or joining another war). Policymakers don’t need to balance the budget every year to put the budget on a sustainable path of manageable debt levels. Without proper handling, the government’s credit score can decrease, which may cause other countries to caution in loaning to the U.S. by Tao Lu – Friday, August 1, 2014, 3:00 PM. The part of my opinion that says yes is based off of my own person budget analysis for my household. Should the Government Balance its Budget? Should the government balance its budget? And forcing to balance the budget may slow its economy to grow (e.g. by Lakita Jones – Tuesday, August 5, 2014, 11:35 PM. If so then hopefully it would be enough to produce an excellent return on their investment that could potentially help the nation lower the current debit levels. The amount of money that we are indebted to others beyond me, the only way that I can see the US ever coming out of debit is that if they are actually investing some of their borrowed money. “Fiscal stimulus can be useful sometimes. After all isn’t that what government is for? The federal Conservative government said in its April budget that it would cut the tax rate on small business profits to 9%, matching a New Democratic policy. So imagine a nation with no budgeting plan. Pro. Many conservatives have suggested passing a law or even a Constitutional amendment requiring the government to balance its budget. Many US lawmakers have long voiced concern about the country’s growing debt and the regularity with which the federal government runs its annual budget at a deficit, and some have even suggested the US Constitution be amended to require that the federal budget remain in balance. In 1995, a proposed constitutional amendment that would require a balanced budget passed the U.S. House of Representatives by a wide margin, and failed in the U.S. Senate by only a single vote. Yes, the US should definitely try to balance its budget. I agree with your thoughts on the government balancing their budget. Economics is concerned with production, distribution, and consumption in an economy. We've received widespread press coverage since 2003, Your UKEssays purchase is secure and we're rated 4.4/5 on reviews.co.uk. Working within a balanced monthly family budget has been my priority and personal preference, similarly I believe the government should keep a balanced budget as its top priority. The market would not be right, and companies will not be able to run right. 1. by Barbara Harris – Tuesday, August 5, 2014, 6:57 PM. If the government is not able to balance its budget, then everything will become a complete failure. Politicians need an increasing supply of money to pay off promises they made for the campaign contributors. All work is written to order. No plagiarism, guaranteed! by Anand Viswanath – Friday, August 1, 2014, 5:08 PM. However, I would automatically think that at first sight the best answer would be yes, the government should always have to keep their budget balanced because then they could keep track of spending more easily and to become more continence of what is actually being spent and what is available to spend. Balanced budget is good for economic development and welfare activitie view the full answer. Registered Data Controller No: Z1821391. Argumentative Essays for writing techniques and actionable ideas. Net impact unclear.”Response: Uncertain. It’s not easy to balance its budget, but continuously to increase deficit is the worst. To balance the budget right now, Congress would have to eliminate many programs. Now is the ti “Fiscal measures (e.g. No, the government should not be required to always balance the budget. by Olutobi Osinowo – Tuesday, August 5, 2014, 10:03 PM. Most governments prefer to finance their deficits instead of balancing the budget. Do you have a 2:1 degree or higher? 5. Here there is no surplus or deficit in the budget. However, for a country is a different issue, sometimes, a lot of spending can’t aviod (e.g. The only way for the government to balance the budget is to increase taxes or and reduce spending. TARP) can and often do reduce the severity of recessions.”Response: Strongly Disagree, Oliver Hart, Harvard Yes, Government Should Decrease Spending to Balance the Budget. Ok I got a few good answers on why our Government should not balance its budget. If the government does balance its money well, then it could fall in the wrong places. Education Funding Reform: The IFO predicts the education budget will grow by 6.9 percent, or $797 … And it could also result in a recession, which will lead to a depression. I agree and disagree with your statement. I think the government should always be able to balance its budget. As the United States’ looming deficit continues to dominate the national discourse, many are calling for a Balanced Budget Amendment to be added to the Constitution. The preoccupation with balanced budgets limits what fiscal authorities are willing to do to boost growth. They need to be aware of what and how the money can be spent. As a result it may not be benefit in a long run. US government plays a major role in the analysis and reporting of how well or how poorly the country is managing its financial structures. In fact, not only should a balanced budget be a high priority policy goal, it should be at the top of the list. Disclaimer: This work has been submitted by a university student. To protect the citizens of our nation and to provide resources so our country can thrive. Why or why not? We're here to answer any questions you have about our services. "Every family in America has to balance their budget," recently thundered Speaker of the House John Boehner. Should the government be required to balance the budget is a good proposition to consider. If the economy is booming, the government should shrink its debt. You shouldn’t spend more than you make. The Big Picture The Numbers Less Stress National Savings Interest Rates Investment Spending The Chain Reaction Labor Productivity Wages Production of Goods and Services 1980: $710 Billion 2009: $7.6 trillion Each Person's Share: $25,000 I agree with your post that the government should keep a budget. But most … cut spending on social security, or collect more tax). If the government will not be able to balance its money, it might as well become a monarchy or dictatorship and put the power into ones hands. As always, you are giving a very high quality answer. “At the end of FY 2014 the gross US federal government debt is estimated to be $17.9 trillion, according to the FY15 Federal Budget. However balancing the government’s budget should not always be required nor should that be the goal because there are too many variable. It happens daily in society on a much lower scale. Either option would hurt the poor the most during recession. а . Such measures are also politically unsustainable. Instead of making muscle gains, I'm outchea making academic gains. The very first thing a person must do to balance their budget is cut down on the amount of money they are currently spending. Two panels of expert economists consider the nature of tech companies’ dominance. Government bonds finance the deficit. To continue to fleece us with interest payments on money the citizens didn't borrow. There is no balanced budget provision in the U.S. Constitution, so the federal government is not required to have a balanced budget and usually does not pass one. social security, unemployment) and the spending may over what you make. The government can generate more revenue via raising taxes or the government can reduce spending by ending subsidies, scaling back with Medicare and social security to balance its budget. I have certain beliefs that say yes and others that say no. The government needs to to the exact same thing to balance the budget of the nation. Overall, my opinion is that it is a must that the government balance its budget. Just a threat decreased the credit of the government. At the end of FY 2014 the total government debt in the United States, including federal, state, and local, is expected to be $21.0 trillion” (http://www.usgovernmentdebt.us/ ). The debt will eventually catch up with the country and future generations will have to carry that burden. Also I don’t see how it would be enforced.”Response: Strongly Disagree, Larry Samuelson, Yale On the other hand, collecting more means more tax. The U.S. national debt is close to 14 trillion dollars. From a finance view, it’s good to balance the budget. If the government does not balance its budget, money will not be distributed properly and the economy could crash. This could cause a easy access to debt. Ms. Snowe and Mr. DeMint compare the federal government to a family that supposedly has to balance its budget, and the comparison is actually a useful one. Without proper management of the budget, the economy can be greatly impacted and citizens can be effected by this mismanagement in ways such as stock market crash, unemployment, unstable housing market and healthcare, among many other factors. Reference this. Economists emphasize the importance of testing for making critical policy decisions. Should the government be required to always balance its budget? Government incomes is generated from taxes, fees, and business revenue. So all and all I think it’s a good idea based off of your view points and like you said not in an “always” situation should the federal government have to balance their budget. In 1995, a proposed constitutional amendment that would require a balanced budget passed the U.S. House of Representatives by a wide margin, and failed in the U.S. Senate by only a single vote. Even with modest deficits, policymakers can stabilize or reduce the debt as a percent of gross domestic product, which is … To find out, Chicago Booth’s Initiative on Global Markets turned to its Economic Experts Panel with a pair of questions. Last year we were given a clear view of what could happen just over a threat to not meet their responsiblity of paying what they owe. That is what President Clinton did in … In addition, when there is an economic downturn, the amount of taxes the federal government takes in usually drops. Looking for a flexible role? This is a tricky question. Most creditors think that the government is highly likely to repay its creditors. Spending often must be increased during those times or the economy can get worse. The government should definitely always balance its budget. Get more help from Chegg. And anyone who has accomplished that goal of balancing their budget knows that was hard to accomplishment. European economists assess the impact of major economic and public-health decisions facing national and EU leaders. A balanced budget for the Government generally means the difference between government incomes and expenses over an accounting period of one year. If a budget is being balanced you would think that an individual would automatically be cautious of their spending however, as you stated that sometimes their are times when you have to spend over your budget in situations such as social security and unemployment. Sometimes, a deficit may benefit its economy in a long run. If not as you can see from other post it was call a disaster to the government and economy. “Suppose the government spends and borrows less,” wrote Harvard’s Oliver Hart in his response. Sometimes, deficit may benefit in a long term. Not balancing the budget is setting the country up to have problems on down the road. It’s good to balance the budget but shouldn’t make it required as “always”. As leading country in the world, it is important for the United States government stay on course of keeping their budget and allocating finances appropriately. I agree with this statement totally. For many decades, going back to the 1930s, proposals have been put forward to require that the U.S. government balance its budget every year. We started of this century with a surplus but over the last decade the deficits have gone up and continue to rise. That's not always possible, like during a recession when we need spending to stimulate the economy, but right now the US is in an expansion and they should be trying to run a budget surplus by increasing taxes or cutting spending, or both. It will allow the government and the congress to thoroughly check or analyze which programs are working and which programs should be cut. The United States has not balanced the federal budget since 2001, in fact the federal budget was only balanced for 1998, 1999, 2000, and 2001 since 1970! Just as any household or business must balance its spending against available income over time or risk bankruptcy, a government should strive to … It is important for the government to keep a budget. Reducing transfer payments can end up hurting the poor whom are the most vulnerable during a recession, but an excessive amount of debt causes the government to spend more on funds on the interest for that debt instead of financing public programs and services. At the end, it may slows the economy to grow. Requiring a super-majority to raise the debt … Reduced revenue would make it more difficult for the government to balance its annual fiscal-year budget; over 10 years, estimates suggest, the tax bill could add between $500 billion and $1.4 trillion to the national debt. I too had the same similar views as you did with regard to it being a good idea for the government to have to balance their budget. Congress is expected to vote this fall on an amendment to the Constitution that would require the federal government to balance its budget each … Yes, just like families have to. How should European policy makers respond to COVID-19. How would forcing the federal government to stick to a balanced budget each fiscal year affect the US economy and the government’s ability to borrow? Threat of political extortion by a congressional minority. The panelists were nearly unanimous in saying that a balanced-budget amendment would not “substantially reduce output variability in the United States,” but there was less agreement as to whether such an amendment would make borrowing cheaper. I agree with you that this is a tricky question. Study for free with our range of university lectures! Previous question Next question Transcribed Image Text from this Question. RESEARCH-DRIVEN INSIGHTS ON BUSINESS, POLICY, AND MARKETS, © 2020 CHICAGO BOOTH REVIEW. I believe that this question is what I consider to be double sided. That makes government bonds more attractive than riskier corporate bonds. Should the government be required to always balance its budget? Just like how a family that borrows beyond its means will struggle a lot, so will government deficit spending cause much trouble in the long run and ultimately have the future generation pay for it. Yes, in the last seventy five years are so, in US we are used to see either a deficit or surplus governments, more so on the deficit side.But yet we did not just survive, but remained a power house of the world.But the borrowing has going up the roof and government deficit is increasing by seconds.Now that the other economies from BRIC nations are posing a threat,it might be a good idea to think about balancing the budget or getting closer to that in order to support our future generations to remain in same dominant state like us now. It is known that good credit can get you anything and I believe that it should apply to all parties. Yes, the government should have to balance its budget, because that is good, sound fiscal policy. Registered office: Venture House, Cross Street, Arnold, Nottingham, Nottinghamshire, NG5 7PJ. You can view samples of our professional work here. The U.S. national debt is close to 14 trillion dollars. The consequences to anyone of those options are not favorable for the people and or businesses. Just like an individual has to balance his or her money, the government has to allocate the money to different areas each year. by Anand Viswanath – Thursday, July 31, 2014, 10:46 PM. This is not an example of the work produced by our Essay Writing Service. Every family has to balance its budget. It diminishes corruption. by Lakita Jones – Tuesday, August 5, 2014, 11:27 PM. Regardless of the topic, subject or complexity, we can help you write any paper! by Tracy Vaughn – Tuesday, August 5, 2014, 9:00 PM. The country is writing checks that it cannot cash, and it will catch up with the country and cause problems eventually. The government needs to start balancing its budget before the long-term effect becomes impossible to handle. There are a lot of negative outcomes that could possibly occur due to the government defaulting on any of their loans or not distributing their finances appropriately. by Tiffany Allen – Tuesday, August 5, 2014, 10:59 PM. The U.S. can never be forced to default on debt denominated in dollars: It’s completely and totally … To export a reference to this article please select a referencing stye below: If you are the original writer of this essay and no longer wish to have your work published on UKEssays.com then please: Our academic writing and marking services can help you! We don't care about our kids and how there gonna pay it back. Balanced budget means government revenue is equal to government expenditure. A path to destruction. On reviewing the statistics from the last great depression period, Though it is evident to me that our government has ran into deficits more than surpluses and yet has remained an economic super power in the world, indicating that balancing the budget may not be essential, I still believe a government that does balance their budget can create a strong economy and better opportunities for their future generation. I feel that things operate a little more smoothly as long as I keep up with a continued budgeted balance. At some point a future generation will have to carry the burden of higher taxes and interest rates. If they invest more into programs that will help boost the economy it will help to create jobs and lower the unemployment rate; which helps the burden of lowering transfer payments. Michael Maiello | Sure. No, the government should not be required to always balance the budget A balanced budget for the Government generally means the difference between government incomes and expenses over an accounting period of one year. “This might raise interest rates if consumers spend more to offset critical services.”, Darrell Duffie, Stanford VAT Registration No: 842417633. In fact, less than a month before the US Senate passed its tax bill, the Wisconsin state senate passed a resolution that made Wisconsin the 28th state to call for a constitutional convention to create such an amendment. “The gov(ernment) is way down the path of disappearance of a market for its debt, with the highest peacetime deficit/GDP ever.”Response: Agree, William Nordhaus, Yale According to last year’s Congressional Budget Office, the federal forecasts revenue will reach approximately $3 trillion and the spending is approximately 3.78 trillion. 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