Sure. 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. Even if policymakers passed such legislation tomorrow, they could not bind their successors to it. 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/ ). Policymakers don’t need to balance the budget every year to put the budget on a sustainable path. 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. To find out, Chicago Booth’s Initiative on Global Markets turned to its Economic Experts Panel with a pair of questions. by Lakita Jones – Tuesday, August 5, 2014, 11:27 PM. Company Registration No: 4964706. The part of my opinion that says yes is based off of my own person budget analysis for my household. It applies to both personal and business. They need to be aware of what and how the money can be spent. Economics is concerned with production, distribution, and consumption in an economy. “This might raise interest rates if consumers spend more to offset critical services.”, Darrell Duffie, Stanford TARP) can and often do reduce the severity of recessions.”Response: Strongly Disagree, Oliver Hart, Harvard It diminishes corruption. Copyright © 2003 - 2020 - UKEssays is a trading name of All Answers Ltd, a company registered in England and Wales. 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. It will allow the government and the congress to thoroughly check or analyze which programs are working and which programs should be cut. It is important for the government to keep a budget. 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. 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. 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. 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. Just as any household or business must balance its spending against available income over time or risk bankruptcy, a government should strive to … I believe that this question is what I consider to be double sided. 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. Should the government be required to balance the budget is a good proposition to consider. Requiring a super-majority to raise the debt … In fact, not only should a balanced budget be a high priority policy goal, it should be at the top of the list. If the government decreased its spending, that also decreases the poor income and consumer’s consumption indirectly. “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 Discuss. ALL RIGHTS RESERVED. As a result it may not be benefit in a long run. The most important piece, the balanced-budget amendment, should be a no-brainer. If the government does not balance its budget, money will not be distributed properly and the economy could crash. 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. Spending often must be increased during those times or the economy can get worse. 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. If the government increased the taxes, that would decrease income. 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. A path to destruction. Congress is expected to vote this fall on an amendment to the Constitution that would require the federal government to balance its budget each … Reference this. VAT Registration No: 842417633. 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 Should the government be required to always balance its budget? European economists assess the impact of major economic and public-health decisions facing national and EU leaders. I agree with you that this is a tricky question. Balancing the government’s budget sounds logical, as a matter of fact, that is the task of most Americans. I don’t even think that is actually possible to balance the federal government’s budget on a yearly basis. I believe that keeping the budget balanced will help the government to properly allocate funds to different sectors determined by their importance. This is a tricky question. 3. Get more help from Chegg. “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. Free resources to assist you with your university studies! “Suppose the government spends and borrows less,” wrote Harvard’s Oliver Hart in his response. All work is written to order. Argumentative Essays for writing techniques and actionable ideas. Will the US need to expand testing before lifting lockdowns? It happens daily in society on a much lower scale. These things can thing lead to other detrimental issues such as high crime, homelessness, crowded jails etc. The U.S. national debt is close to 14 trillion dollars. 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. Registered office: Venture House, Cross Street, Arnold, Nottingham, Nottinghamshire, NG5 7PJ. Registered Data Controller No: Z1821391. by Laura Porter – Saturday, August 2, 2014, 4:45 PM. 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! If no budget is in place, overspending and potential bankruptcy is sure to occur. No, the government should not be required to always balance the budget. 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. I agree with you. As a result, deficit is happening. by Barbara Harris – Tuesday, August 5, 2014, 6:57 PM. 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? Now is the ti by Anand Viswanath – Friday, August 1, 2014, 5:08 PM. Michael Maiello | This could cause a easy access to debt. Balanced budget is good for economic development and welfare activitie view the full answer. Yes, the US should definitely try to balance its budget. Cut the spending means people will get less benifit, there will be less federal employees to do work. The preoccupation with balanced budgets limits what fiscal authorities are willing to do to boost growth. If the government does balance its money well, then it could fall in the wrong places. I feel that things operate a little more smoothly as long as I keep up with a continued budgeted balance. Yes, the government should have to balance its budget, because that is good, sound fiscal policy. *You can also browse our support articles here >. cut spending on social security, or collect more tax). It’s not easy to balance its budget, but continuously to increase deficit is the worst. 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. As always, you are giving a very high quality answer. After all isn’t that what government is for? 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! Do you have a 2:1 degree or higher? It is known that good credit can get you anything and I believe that it should apply to all parties. The very first thing a person must do to balance their budget is cut down on the amount of money they are currently spending. by Tracy Vaughn – Tuesday, August 5, 2014, 9:06 PM. “Fiscal impact lowers interest rates, but turmoil impact would raise. 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 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. by Olutobi Osinowo – Tuesday, August 5, 2014, 10:03 PM. However balancing the government’s budget should not always be required nor should that be the goal because there are too many variable. The government should definitely always balance its budget. I agree with this statement totally. We've received widespread press coverage since 2003, Your UKEssays purchase is secure and we're rated 4.4/5 on reviews.co.uk. 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. Also I don’t see how it would be enforced.”Response: Strongly Disagree, Larry Samuelson, Yale Pro. Balanced budget means government revenue is equal to government expenditure. Economists emphasize the importance of testing for making critical policy decisions. And forcing to balance the budget may slow its economy to grow (e.g. That makes government bonds more attractive than riskier corporate bonds. Economics Should the government be required to always balance its budget? 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. Policymakers don’t need to balance the budget every year to put the budget on a sustainable path of manageable debt levels. Sometimes, a deficit may benefit its economy in a long run. Dec 06, 2017. We started of this century with a surplus but over the last decade the deficits have gone up and continue to rise. 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. Just a threat decreased the credit of the government. 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. Most governments prefer to finance their deficits instead of balancing the budget. To balance the budget right now, Congress would have to eliminate many programs. Under which conditions can budget deficit be justified? Now the U.S. is in debt and most of its payment goes to the interest. The government needs to to the exact same thing to balance the budget of the nation. Balanced Budget Suddenly Looks More Appealing." The debt will eventually catch up with the country and future generations will have to carry that burden. From a finance view, it’s good to balance the budget. Government incomes is generated from taxes, fees, and business revenue. Should the Government Balance its Budget? But the notion that the federal government should always aim for a deficit of zero has little if any economic rationale. Government bonds finance the deficit. 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. Edward Glaeser. 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