Issue of Fiscal Cliff and the Economic Validity of Sequestering

The growing national deficit is a looming problem in the United States now more than ever. The national debt is constantly increasing and government spending is out of control. If these issues are not solved then they could spell disaster for the nation’s economy when the infamous debt ceiling is finally reached. Currently the national policy on the debt is to continue raising the debt limit until a solution is found that is agreeable between both parties in Congress. The two main issues of over spending and the constant raising of the debts ceiling by Congress can both be resolved by government spending reform, balancing the federal budget and initiating pro-growth policies in order to increase the government’s tax revenue.

In response to a rapidly increasing national debt, President Barack Obama signed into law in August of 2011 the Budget Control Act (BCA) which mandated $1.2 trillion in across-the-board spending cuts, known as sequestration, over a 10-year period (Matthews, 2013). The BCA of 2011 was intended to serve as motivation for the Joint Select Committee on Deficit Reduction to come up with a deal for achieving equivalent spending cuts and avoid a mandatory sequestration (Matthews, 2013). The committee

Deficit spending is often applied in a political context. However, it can be applied in

The recent clash between the president and congress about raising the debt ceiling made the front page on every newspaper throughout the country and generated controversy of unimaginable proportion among the citizens of the United States of America (College for Financial Planning). No macroeconomics issue is more controversial today than the impact of large public debt on the economy and on future generations, but, however, there appears to be a huge disconnect between professional, political leaders, and the ordinary public about the national debt and its impact on the current and future

Economically there are many challenges we face as a country with our current fiscal policies. Since the 2008 financial crisis, there have been many debates in regards to how we should go about managing our financial system. Unfortunately, we as team believe that in order for us to stabilize our nation financial issues we are going to have to make restrictions in certain channels, which might affecting our way of life. One area needing attention is government spending and how it has to be reduced, and this would have a ripple effect in certain areas. Our elected officials will have to come to a compromise and determine which sectors are costly and can be reduced.

Many United States' citizens are unaware of the country's current financial state. Many assume that one of the world's wealthiest countries could never be in debt. This is untrue however, and, in fact, the country with the greatest income per capita is in major debt. This study will examine possible solutions to reducing the United States' national budget deficit.

The federal budget deficit is a much discussed and little understood subject in American politics. The current recession has dramatically decreased tax revenues, driving the United States federal government to increase spending in an attempt to stabilize the economy. As a result the current federal deficit is at over $1.3 trillion dollars. This is approximately $47,754 per U.S. citizen or $137,552 per U. S. taxpayer (U.S. Debt Clock: Real Time, 2012).

The budget debate of today deals with many of the same problems as the one in the year 1993. Although one significant difference is that the deficit has

Better known as the debt ceiling compromise, the sequester was intended to serve as an incentive for the Joint Select Committee on Deficit Reduction, also known as the “supercommittee,” to come to a deal to cut $1.5 trillion over the next 10 years. If they could not come up with a deal, $1.2 trillion in further spending reductions would be implemented starting Jan. 1, 2013. Despite the deadline being extended to March 1, the supercommittee still could not come up with a plan. As a result, the sequester was set in motion, causing the government to trim its budget by $85.4 billion this year and by $1.2 trillion over the next 10 years (Zeitlin, “Fiscal cliff for dummies”)

But great as our tax burden is, it has not kept pace with public spending. For decades we have piled deficit upon deficit, mortgaging our future and our children’s future for the temporary convenience of the present” (Reagan). The nearly identical economic assertions that Reagan makes in both speeches perfectly demonstrates the correlation between “A Time for Choosing” and the “First Inaugural Address” and supports the idea that Regan’s speech in 1964 was basically an explanation of his presidential platform.

When a government’s spending exceeds its revenues causing or deepening a deficit it is called deficit spending. Deficit spending is only one of numerous tools used to help manage the economy. Deficit spending is presumed to stimulate consumer demand by helping the consumer to obtain more money to spend, in turn, the demand of product will rise. There are advantages and disadvantages to deficit spending that we will discuss further below.

This article discusses how the power and responsibility of the federal government varies during periods of crisis and anticrisis. During a crisis event such as war, officials are able to push through unpopular policies, like tax hikes, spending cuts, and employee layoffs. Normally these policies would be too politically risky for a politician to attempt but they strengthen the financial health of the government in the long run. The difference during an anticrisis is policy makers are pushed to avoid any unpopular or stressful decisions. Instead they are under pressure to pass major tax cuts and new spending programs that may be popular at the time but in the long run will weaken the financial health of the government.

Recession is a term that looms over any society at some point or another but what does recession mean for the economy, in short it is an economic decline. This essay will examine the meaning of recession and will discuss the fiscal and monetary policies that are used to pull economies out of recessions. The great Recession of 2008 will shed light on how these policies were successful at restoring economic growth and reducing unemployment.

This paper will attempt to answer the question: Is the federal deficit and government deficits in general a good or a bad thing? While it may be easy to lose sight of how the government chooses to handle its money, it is also important for citizens to be conscious of how their money is being spent, and whether or not the current course that the government is plotted on is either sustainable or the best allocation of resources.

Recently, the Spanish government's new bundle of tax increases and expenditure cuts pitches an attention on a progressively argumentative discussion about whether fiscal austerity in Europe is further damaging the patient's health rather than leading to retrieval (Terry, 2009). Even though this might sound a little boring, the word "fiscal austerity" has really turned out to be a topic that has been getting hotter by the minute. This has been a subject of debate that is among experts and political economists in current weeks, and I for one believe that it is a much needed discussion. Many are unaware how important this debate has become, and that it is well worth the discussion. First, it invites everyone to take a good look that goes way beyond the mindless dramatics of this year's campaigning and enacting, and instead to really start to examine a question that has become far more pertinent to our long-term safety, wealth and happiness, specifically: What is the right procedure, size, and possibility of government? What is administration's nature and what should it be doing, or possibly more fatefully, what it is doing? Second, the discussion certainly asks how we should be trying to finance the government we have, and whether its expenditure, taxing, using, and money-production are ethical or not, and realistic or not. Persons should pay consideration to this discussion, as its consequence will