Imagine that you are an Economic Advisor to the President and need to provide a plan for reducing the federal debt. Conflicting goals create a need for compromise and tradeoffs to create a national budget while trying to remain under deficit limits. Follow the steps below to complete the activity, then respond to the questions posed:
- Follow this link to The Committee for a Responsible Federal Budget: Stabilize the Debt Simulation.
- Carefully read the background information and instructions before beginning the simulation. Your goal is to stabilize the U.S. debt at 60% of GDP by 2018.
- When cutting programs, keep in mind that program cuts could seriously affect citizens’ daily lives. While it is easy to quickly reach deficit limits by making extreme cuts or even eliminating entire programs, try to consider the real-life ramifications of such cuts. Make sure to click on each budget area to access more information about it in weighing your decisions.
- You do not need to provide your personal information at the end of the simulation.
After you have completed the online simulation, answer the following: What were the major changes you made to the budget to reach the goal? Why did you choose those changes over others – what were the trade-offs involved? How will the changes you made affect different groups of citizens? Do you think these changes would be politically feasible? Respond to at least two of your classmates’ postings.
Mikesell, J. (2018). Fiscal administration: Analysis and applications for the public sector (10th ed.). Retrieved from https://redshelf.com/
- Chapter 3: Budget Structures and Institutions: Federal and State-Local
- Chapter 4: Budget Methods and Practices
- Chapter 5: Budget Classifications, Systems, and Reform: Trying to Make Better Choices
- Chapter 6: Budget System Reforms: Trying to Make Better Choices
Stabilize the debt: An online exercise in hard choices (Links to an external site.). (n.d.). Retrieved from http://crfb.org/stabilizethedebt/
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Office of Management and Budget (Links to an external site.). (www.whitehouse.gov/omb/)
Budget Analysis – Budget Cuts
In both good economic times and in bad, public managers will often need to review their budgets and suggest areas in which their budgets may be reduced. Read Question 1 at the end of Chapter 3 in your text and propose how you would approach reducing the School of Public Affairs at Enormous State University budget by 5%. Begin with the strategies offered in your text and try to find articles or information on how cutbacks are handled in your city or state. Respond to at least two of your classmates’ postings.
QUESTIONS AND EXERCISES
- The data in the following table present revenues and expenditures by categorized type for the School of Public Affairs at Enormous State As with most elite programs at state universities, the school has accepted missions of teaching, research, and service to the university, state, and nation. The data include budgeted and actual data for three years and the proposed budget for fiscal 2014–2015. Your task as a budget analyst is to learn as much as possible about the operations of the school and its plans for the budget year just from these data. In particular, you should look for trends, changes in shares and ratios, and the categories that are particularly important in driving the finances of the school. A few notes about the reported data: First, the state appropriates money to the university and then the central administration distributes that money to the various operations on campus. That is the source of the state appropriation number—it has been assigned to the school, so this number for 2014–2015 is an actual. All others are part of the request. Second, the central administration charges the school for the services that it provides (central library, computer net-works, etc.). This charge is the assessment number in the table. It is based on school operations during the year, so it is an estimate and counts as a negative component in school revenue. Your answer to this exercise should include both your conclusions from your analysis and a list of questions that your analysis has led you to have for the person who prepared the 2014–2015 budget. Suppose the central administration has asked for each school to reduce its spending by 5 percent. Where would you suggest that the school turn to make that reduction?”