ECON 2305 Lecture27Outline of Last Lecture I. National DebtII. Federal BudgetOutline of Current LectureI. National Debt (Public debt)II. Budget DeficitCurrent Lecture National Debt (Public debt)Accumulation of the many “budget deficits”Budget deficit Expenditures exceed tax revenues Why are we in debt?Wars War of independence WWIINational Debt = 125% of GDP Macro goals = recessions Social Entitlement programs Difficult to cut Non-discretionaryProblems with debt:SizeInterest on the debtExternal debtFuture generation issueRate of increaseWhat can we do about it?Cut spending- the DEFICIT Taxes – increase, but on who?Default These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.Refinance Sale of Assets Show US citizens some seriousnessREALITY – Not ONE answer What is the issue?Too much spending + not enough revenue Congressional dilemma Super committee…why did they “fail?”Budget PhilosophiesBalanced budgetRevenues = ExpendituresAmend the constitution Attempted – multiple times (1995)Cyclically balanced Think business cycle Functional financeMeet macro goals Reduce government spending Increased tax revenues from an expanding
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