The Center for Budget and Policy Priorities recently released a study that shows a breakdown of the source of the budget deficit in the years to come.Noticeably the TARP and stimulus only make up a small portion of the deficits in future years since these are one time expenditures (doled out over the course of a few years). However, the recession, two wars, and tax cuts make up a large majority of future deficits.
President Obama’s proposed budget, projects an increase in the deficit in the near term, but reductions by the end of the decade. The President has also called for a bipartisan panel to come up with proposed solutions to the deficit, however the panel was met with disapproval in Congress.
Subsidies are an important way the government stimulates some activities while discouraging others. In particular farm subsidies are a huge deal in the U.S., with frequent calls to change policy but few results. A new proposed cut to farm subsidies looks to be dead in the water. Tax expenditures (through subsidies and credits) have become a growing portion of our tax code. One of the problems with tax expenditures, is that politically they are easy to start but very difficult to end.
Questions you might try to answer:
- Do you believe that we currently need to balance our budget as a nation and ‘live within our means’?
- If we are going to balance our budget, should we prioritize cutting spending or raising taxes? In either scenario, discuss the political feasibility of your proposal.
- Many pundits are against the expiration of the “Bush Tax Cuts”, particularly in the time of a recession. Where do you stand on this, and why?
- Consider the rising cost of Medicare to the government, and what we need to do in order to tackle this problem.
- While farm subsidies are only a small portion of our government’s ‘tax expenditures’, subsidies are a very important part of our overall government strategy of giving incentives to promote or discourage certain behavior. What do you believe we should do about tax subsidies?