Question

respond to each of the following prompts based on what you’ve learned in this module about deficit and debt.

What present and future benefits might result from an amendment requiring that each year's budget be balanced?

What limitations or costs might result from such an amendment?

Describe alternative legislation that might eliminate chronic deficits but have more desirable effects on the economy.

Answer 1

With the amendment to bring a balanced budget, the present benefits will be a control over the debt level that was required in the past to cover the budget deficit. So, the less amount of interest and principal payment will be required. The another benefit is the government will make some austerity measures to help reduce spending and their accountability part will increase. The future benefit is the controlled or lesser deductibles and taxes to be applied upon future generation. Besides, future generation will have a USA with lower debt. So, more funds will be available for the development work.

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This amendment will have some limitations as well. The first limitation will be the reduction of spending upon development programs, that was meant for the poor people. It will hurt them. The second limitation will be the reduction in spending on social security and Medicare / Medicaid as well as programs for the needy families. It will create a chaos in the society and inequality will grow and hurt the society in the USA.

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The alternative amendment should involve reduction in spending on those projects that are non-productive such as spending on government functions, without affecting the welfare programs. Though, the spending on development programs should be continued and it should be time bound to measure its impact so that slowly with time, it can be reduced by making a significant impact upon poverty. So, there should be a balanced approach that should not hurt the poor and elderly people.