Sequestration and PotentialEssay Preview: Sequestration and PotentialReport this essayIntroductionOn August 2, 2011, President Barack Obama signed into law the Budget Control Act of 2011. This act was formulated off the guidance of the 1985 Balanced Budget and Emergency Deficit Control Act which introduced the term heard on many news stations today, sequestration. The Budget Control Act of 2011 was the final resolution to the debt ceiling crisis that capped in 2011. The basis behind the 2011 Act is to increase the statutory debt limit and work towards successful budget cuts which will lower the nations debt. Sequestration cuts will affect many vital federal programs, and the repercussions of the Budget Control Act can be detrimental to our economic future.
• Article VI: Choices Can Save America From Its Dysfunction It is imperative that all Americans receive the same education as their children have, a higher standard of living, or a lower debt burden. This article examines the current state of the country through a historical perspective that incorporates a variety of sources. It offers two paths to change the culture of our economic and political system. The first way to approach issues such as student debt reduction, debt service, low-interest rates, job creation, higher wages, higher quality-of-life, and improving our infrastructure is to reform our current economy so that students, families, and working citizens are able to succeed in what they do best. With the election of President Obama and all of the current Democratic administrations , the American people are on track for growth. This article is an attempt to understand and address some of the issues the current Democrats have placed in place right now. The other way to approach these issues is to seek to find out the solutions available to citizens through their elected representatives and our representatives in Congress.* Our political system is not perfect. We elect not just politicians but also elected officials who can be called to account for what’s going on in their lives, but also have an answer to what has not always been considered the role of government in today’s society. Unfortunately, politicians are never seen by the public as legitimate. While we try ourselves to look forward to a time when all Americans are represented and accountable by representatives of the people, too many Americans are simply in denial of the real role of government in this society as they try to fix the system and the system’s problems. Even after years of debate and debate on how we could all address this problem and make a better world and a better world. Unfortunately, all that we’ve ever known about government is that it only works when all people are involved and when every vote is counted. Not the government of the states, but a group of bureaucrats who are underpaid because they don’t have to. These bureaucrats are the bad guys and the good guys. These are bureaucrats who only use their power to control the media, to coerce lawmakers to act against Congress, to block funding to the states and to get power from foreign countries from the American taxpayers. I’ve put together articles reflecting our current position and what needs to change as a society when we begin addressing these issues and how we can do it. For example, we are attempting to reform health care and school enrollment through making it legal to elect teachers to represent families. We are also proposing to make it legal for teachers in the private sector to opt out of school vouchers and other taxpayer-funded services. We are also working toward a way to offer private student loan repayment at a reduced rate, which will make it less challenging for our taxpayers and those affected by student loan fraud and make it easier for students and parents to choose repayment options. We’re at peace with how things are going so far. We are moving in the right direction. As the nation of today prepares to face up to rising deficits, we are starting to see what happens. We are
[PDF] – See also the previous discussion of the President’s January 11, 2015 statement.
Sequestration and PotentialEssay Preview: Sequestration and PotentialReport this essayIntroductionOn January 20, 2011, President Barack Obama signed into law the Budget Control Act of 2011. Sequestration would take effect on January 20, 2011. This act proposed an overall budgetary cost freeze (CSA) of $19.4 billion for the next 12 months, based on the CSA budget estimate. The CSA is likely to increase or decrease more slowly in the coming fiscal year, as it is expected to be subject to a large government default by the current Congress. It would also be subject to the debt ceiling crisis that took its toll on the American people by 2010, when the U.S. government defaulted and President George W. Bush took office. The debt ceiling crisis that resulted in the October 2010 CSA is now at an all-time low and is going to remain in place for a number of years to come. It is anticipated that, if the debt ceiling were to default with respect to the U.S. Treasury, it would have a national debt of $34.1 trillion. If sequestration is to fail with regard to the government debt-to-GDP ratio, and if the Budget Control Act changes the Congressional Budget Office, we may expect a large debt ceiling run on December 22 and 23. In doing this we will need both a strong budget and a stable CBO that does not create too many uncertainty or risks for policymakers. We cannot simply rely on a flawed CBO. To achieve this, we need to be able to focus on the long-term costs and consequences of cutting our debt. When the debt cap is met, it creates a target that is set by Congress. The CSA would be set within the Constitution, and the national fiscal limit must be met to make that possible. In this regard it is instructive to learn from the Congressional Budget Office’s report entitled: Budget Reconciliation and Deficit Control (Washington, D.C.: Congressional Budget Office; 2011). The Congressional Budget Office report says that “it is the President’s responsibility … to find an optimal cost- and target-setting spending strategy that reduces deficits and creates long-lasting fiscal stability in the long run.” Since President Obama’s January 11, 2011 remarks, it has become clear that he believes that the CSA could end up as a bipartisan framework to achieve long-term budgetary goals and that there is bipartisan agreement on specific actions. It is important to note that this is only the first step of a process in our nation’s long and long-term future. This is a long-term process and Congress should remain vigilant. The final decision on the CSA will be announced soon to the next administration.
Sequestration and PotentialEssay Preview: Sequestration and PotentialReport this essayIntroductionOn August 7, 2011, President Barack Obama signed into law the Budget Control Act of
[PDF] – See also the previous discussion of the President’s January 11, 2015 statement.
Sequestration and PotentialEssay Preview: Sequestration and PotentialReport this essayIntroductionOn January 20, 2011, President Barack Obama signed into law the Budget Control Act of 2011. Sequestration would take effect on January 20, 2011. This act proposed an overall budgetary cost freeze (CSA) of $19.4 billion for the next 12 months, based on the CSA budget estimate. The CSA is likely to increase or decrease more slowly in the coming fiscal year, as it is expected to be subject to a large government default by the current Congress. It would also be subject to the debt ceiling crisis that took its toll on the American people by 2010, when the U.S. government defaulted and President George W. Bush took office. The debt ceiling crisis that resulted in the October 2010 CSA is now at an all-time low and is going to remain in place for a number of years to come. It is anticipated that, if the debt ceiling were to default with respect to the U.S. Treasury, it would have a national debt of $34.1 trillion. If sequestration is to fail with regard to the government debt-to-GDP ratio, and if the Budget Control Act changes the Congressional Budget Office, we may expect a large debt ceiling run on December 22 and 23. In doing this we will need both a strong budget and a stable CBO that does not create too many uncertainty or risks for policymakers. We cannot simply rely on a flawed CBO. To achieve this, we need to be able to focus on the long-term costs and consequences of cutting our debt. When the debt cap is met, it creates a target that is set by Congress. The CSA would be set within the Constitution, and the national fiscal limit must be met to make that possible. In this regard it is instructive to learn from the Congressional Budget Office’s report entitled: Budget Reconciliation and Deficit Control (Washington, D.C.: Congressional Budget Office; 2011). The Congressional Budget Office report says that “it is the President’s responsibility … to find an optimal cost- and target-setting spending strategy that reduces deficits and creates long-lasting fiscal stability in the long run.” Since President Obama’s January 11, 2011 remarks, it has become clear that he believes that the CSA could end up as a bipartisan framework to achieve long-term budgetary goals and that there is bipartisan agreement on specific actions. It is important to note that this is only the first step of a process in our nation’s long and long-term future. This is a long-term process and Congress should remain vigilant. The final decision on the CSA will be announced soon to the next administration.
Sequestration and PotentialEssay Preview: Sequestration and PotentialReport this essayIntroductionOn August 7, 2011, President Barack Obama signed into law the Budget Control Act of
The 1985 Balanced Budget and Emergency Deficit Control ActIn December 1985, President Regan signed into law the Balanced Budget and Emergency Deficit Control Act amendment, which is also known as the Gramm-Rudman-Hollings. This amendment allowed the debt ceiling to be raised over $2 billion. In addition to raising the debt ceiling, it also called for a “five-year deficit reduction plan,” (Bancroft-Berkeley) which would provide a balanced budget by 1991. The term sequestration was used to describe the mandatory spending cuts the Act required. In the 1985 Act required that fifty percent of the cuts would be from discretionary spending, and fifty percent would come from defense. Programs like Social Security, Medicare and other social/anti poverty programs were exempt from the mandatory cuts. In Bowsher v. Synar (1986) the Supreme Court ruled this Act unconstitutional saying the “sequestration process gave Congress undue budgetary power.” (Bancroft-Berkeley) The act was passed again in 1987 and the budget was set to be balanced by 1993 with new deficit numbers. This act provided the baseline for budget sequestration signed into law with the 2011 Budget Control Act.
Sequestration and Keynesian TheoristsThe 2011 Budget Control Act is a government policy to stop the expanding deficit and increase the debt ceiling. The definition of sequestration according to the Free Dictionary is “the seizure of property, or a writ authorizing the seizure of property.” Congress is applying this term to “make the size of the Federal governments budget deficit a matter of conscious choice rather than simply the arithmetical outcome of a decentralized appropriations process in which no one ever looked at the cumulative results until it was too late to change them.” (Johnson, auburn.edu) The act of sequestration is meant to cut the deficit, but in doing so will cut many government funded programs, that could result in higher unemployment rates or increased inflation, which is against the classic Keynesian school of economic thought. During times of recession, the Keynesian theorists argue that government should increase spending to avoid climbing unemployment rates. According to economist Mark Zandi and Alan Blinder, the stimulus spending of 2009 through such programs known as TARP “likely warded off an outright depression. Without those programs the gross domestic product would be 6.5 percent lower, eight million more people would be unemployed, and prices would be falling as deflation set in.” (Brown, 2010) These statements describe how the Keynes theory of government spending to increase productivity works, where a sequestration to cut spending could be detrimental to the economy.
Any increase in spending by the government via transfer programs, military spending, etc. would cause a right shift in the IS curve, which would increase output and the overall raise the level of GDP. If the government cuts programs and decreases spending with sequestration, the IS curve will shift to the left and could prolong the economic recession caused by the world financial crisis. History shows that there are peaks and valleys in the actual and natural GDP that are corrected using stabilization policies that are either monetary or fiscally based controlled by the Fed or congress. The goals for any stabilization policies is to promote growth as fast as possible, which if congress mandates sequestration cuts, the productivity growth rate could fall, causing the GDP level to shrink.
Long Run Economic StabilityThe 2011 Budget control Act established the sequestration spending cuts across the federal budget to be of at least $1.2 trillion over the next ten years. In Defense spending, there is a proposed cut of over $500 billion dollars; the rest of the cuts are out of discretionary spending, one area being Research and Development programs, which could have the largest impact on long run economic stability. According to the Information Technology and Innovation Foundation, the “sequestrations effect on federal R&D will reduce GDP by hundreds of billions.” (ITIF.org) 60% of basic Research and Development programs are funded through federal sources, if congress follows through with the $95 billion in cuts to R&D it is estimated that at drop of $203 billion will occur in the level of GDP.
The Fiscal 2018 Report includes the following numbers.
Federal R&D : Spending on basic Research and Development (R&$038;D) will increase by $16 billion in the 2019-2020 budget.
: Spending on basic Research and Development (R&$038;D) will increase by $16 billion in the 2019-2020 budget. National Economic Recovery & Reinvestment: This program provides over $27 billion to the private sector through a reduction in R&D funding. The remainder is provided through a reduction of $15 billion in the current year.
Source: Government Accountability Office (GAO-2014)
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Government Accountability Office: “The Budget-Cuting Challenge: Budget-Cutting is a Challenge to Excellence” Department of the Treasury. September, 2017. http://www.gaob.gov/news-/federal-recovery/budget-cuts-a-challenge-to-entrepreneurship/ Budget-Cut-ing-is-a-Challenge-to-estrepreneurship Treasury Budget Cuts: “A Congressional Budget for Budget 2017” Financial Times. November 21, 2017. http://www.financialtimes.co.uk/finance/budget/crisis-bill-cut-121277.ece Financial Times. “Fiscal 2017 Budget: Unintended Consequences for Individuals and the Economy”? Government Printing Office. 12 December 2017. http://publications.gov.uk/press/v-news-trend/2016/12/fiscal-2017-budget
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Government Accountability Office, Tax Policy: Fiscal 2017 Budget Cuts for Individuals and the Economy
The Fiscal 2018 Report describes more detailed accounting and accounting methodology for the 2017-18 forecast that is used to prepare the fiscal 2018 Bipartisan Budgetary Statement. According to the revised tax policy for the 2017-18 federal budget, the revenue forecast is based on the average tax rate for taxable income of 50 percent of all income of individuals and is based on the best available estimates for average tax rate for a household income of $54,100 (U.S.). Under current law, marginal tax rates are only calculated for tax expenditures, not individuals, under the reconciliation process. Under the reconciliation process, for example, an IRS employee who spent $9,000 while on federal payroll in 2016 would owe an average tax rate of 31.95 percent; tax expenditures are also subject to the 30 percent withholding tax. An individual who earns $19,200 or more in taxable income would expect to owe a 22 percent marginal tax rate on his or her income from an employer based on an estimate based on the most recent reported IRS Form 1040 from his or her employer for taxable period 2015–FY2016. For a tax rate of 15.3 percent, an individual with
According to Chairman of the Federal Reserve, Ben Bernanke said “the economic recovering is being held back by the ongoing fiscal uncertainty, and that the country faces a shallow recession that could cost over one million jobs