Several months ago, the NY Times published an interactive budget exercise. The goal was for each of us to decide how we would deal with a skyrocketing deficit. Now, with President Obama scheduled to present a major speech on his budget proposals, you might enjoy going here, to decide how you would handle the same challenge.
As for an update, the WSJ yesterday had more news about last Friday’s budget deal. Rather brief, they said it reflected, “What’s Known So Far.”
What we do know is that the government did not partially shut down at midnight last Friday because of a short-term spending bill that was passed. That will take us to this Thursday at midnight when again, further action will be necessary.
“What is known so far” relates to Friday’s agreement on $39 billion in cuts for the 2011 budget that never was approved by the Congress.
- Defense spending: less of an increase in spending
- Departments of Labor, Education and Health and Human Services: cuts
- State Department and foreign aid programs: cuts
- “Earmarks”: cuts
- Future nonprofit health insurance cooperatives: cuts
You might also want to look at the report from the fiscal commission that President Obama appointed. Called “The Moment of Truth,” you can see it here.
The Economic Lesson
Specifically defined, federal fiscal policy refers to taxing, spending, and borrowing. It involves the federal deficit which is the shortfall between annual spending and revenue. The federal debt is the total amount that the U.S. government owes.