Content Tagged: debt-reduction commission

Super Committee Fails to Make Deal

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November 25, 2011

On Monday, November 21st, the Joint Selection Committee on Deficit Reduction announced that the bipartisan super committee could not reach a deal to eliminate $1.2 trillion. Unable to come to a compromise, both parties expressed their unhappiness and blamed each other publicly. In an article by authors Ted Barrett, Kate Bolduan and Deirdre Walsh for CNN, President Obama accused the Republicans of refusing “to listen to the voices of reason and compromise that are coming from outside of Washington.” Republicans condemned the Democrats for the failure of the super committee because the Democrats “would not accept any proposal that did not expand the size and scope of government or punish job creators.” Because no agreement was met, the federal government will automatically reduce spending by $1.2 trillion in January 2013. According to the article, domestic and defensive programs will see a reduction of funding, but Social Security, food stamps, veteran’s benefits, and other “politically sensitive” programs will not.

Obama addressed reporters on the issue of altering or stopping the $1.2 trillion cuts by stating:

“The only way these spending cuts will not take place is if Congress gets back to work and agrees on a balanced plan to reduce the deficit by at least $1.2 trillion. That’s exactly what they need to do. That’s the job they promised to do. And they’ve still got a year to figure it out.”

The CNN article also discusses future problems the federal government might have involving unemployment benefits and payroll tax cuts. Republicans assert that keeping taxes low for the wealthy will help the economy from falling back into a recession. Democrats claim that the national debt will continue to rise unless the large businesses and millionaires pay more taxes.

Teachers could use this article to examine the implications the automatic cuts will have on the federal government and the American people. Questions to consider: Although the federal deficit will be reduced, how does this impact the American public that uses government-funded programs? Is $1.2 trillion too much/too little? Will an increase or decrease in the automatic cuts positively or negatively influence America’s economy?

As the election year nears, students can hypothesize how President Obama and the Republican nominees will discuss the super committee and the federal deficit. By looking at the economic plans of President Obama and the Republican nominees, students should have a stronger understanding of how each individual addresses the current deficit and how their economic plan will affect the size, influence, and goals of the federal government.

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Smiling Amid Failure: Political Cartoons about the Super-Committee

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November 23, 2011

The super-committee failed to agree on a plan to cut the federal deficit a day ahead of their November 23rd deadline.  Though that news may seem grim, a number of political cartoonists have found ways, if not to make light of the situation, at least make fun of it.  U.S. News and World Report website has compiled 20 political cartoons about the super-committee, all of which will elicit a smile, if not a chuckle (in my opinion).

While the cartoons come from a variety of sources, a number of obvious themes emerge from the 20 collected.  Thanks to the super-committee’s “super” name, many of the cartoons feature Superman[1] as a stand-in for the entire committee.  Others mention Superman without his actual portrayal.  Still others use the approaching holiday season as the reference point – a number of cartoons have Christmas and Thanksgiving references.

These political cartoons lend themselves to a number of social studies’ lessons, from learning how to analyze and glean meaning from a political cartoon to understanding what happened in the super-committee meetings (number nine does an excellent job of demonstrating a reason the talks failed, for example).

Since political cartoons often are introduced in middle school social studies’ classes, students should be familiar with the concept.  It may be useful to ask students what political cartoons are, and in what historical context the cartoons were discussed.

If the super-committee has been a consistent discussion topic in your class, these cartoons require little explanation or further background information.  Teachers may want to focus on a single cartoon from the 20, or hand out a number of different ones to students in the class.

One activity could be to have students work in pairs to examine a single cartoon.  They could write a paragraph describing what the cartoon shows, what it seems to be indicating, and if the cartoonist’s point of view seems to be clear.  Who do the characters in the cartoon seem to symbolize (if anyone)? What does the cartoonist want you to think? Do you think the cartoon demonstrates a political bias?

After this activity, students either could present the cartoon about which they wrote or set up a “gallery walk” in the classroom – put the cartoons and the accompanying written paragraphs on the desks or walls and have students walk around to view the other students’ responses.


[1] While most students will recognize Superman, the teacher may need to explain the impact of kryptonite on him.

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“Patriotic Millionaires” for Higher Taxes

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November 18, 2011

As past blogs have discussed, the Joint Selection Committee on Deficit Reduction has less than a week to develop a plan to reduce the national deficit by $1.2 trillion. The super committee, however, has come to a standstill, causing many politicians to publicly express their concern and demand party leaders to get involved. According to an article by Susanna Kim for ABC News, with the deadline approaching, members of the group Patriotic Millionaires for Fiscal Strength have lobbied for their taxes to increase in order to help lower the national debt. Millionaire Charlie Fink, a former executive at AOL, believes, “Without revenue, we will never solve the problem by giving tax cuts to the wealthy while supporting two foreign wars.” This Wednesday, he and other members of the organization personally visited a few politicians that comprise the super committee to convey their viewpoints on the current state of the economy.

Other members of the organization have also spoken out about the financial status of the United States. According to Kim’s article, Robert Johnson, former chief economist of the U.S. Senate banking committee and millionaire, is quoted as saying:

“America is no longer based on markets and capitalism, instead our economy is designed as ‘socialism for the rich’ – it is designed to ensure that the wealthiest people take all of the gains, while regular Americans cover any losses.”

 

“It’s a Las Vegas economy where regular Americans put their money on the table and the richest 1 percent own the house,” he said. “And if the 1 percent happen to lose money, the 99 percent bails them out – covers their losses and then stands by watching while the house does it all over again.”

 

The organization has contacted the federal government in the past and even asked President Obama to let the tax cuts established in the Bush-era to finish at the end of this year. Their website, FiscalStrength.com, posts their letter to President Obama expressing their desire for higher taxes for millionaires. Also on the site is their letter to the super committee asking for the tax rate to increase to at least 39.6% for incomes over $1 million.

Teachers could use this article in conjunction with past blogs to discuss the differences in tax rates on personal incomes. Questions students could consider: How were these rates developed and how have they changed historically? How might these rates influence people’s personal spending? Will a change in tax rate for millionaires make an impact in the national debt? Why or why not?

Students could also use this article to consider the influence of interest groups in Washington, DC.  Who might disagree with the opinions of the group Patriotic Millionaires for Fiscal Strength? Could those individuals or groups also be considered “patriotic” and believe in “fiscal strength”?  What might account for their different definitions of these terms?

Students could write a research paper, individually or in a small group, to answer these questions and others. This should enhance their comprehension about the development of tax rates and the impact it has on personal and governmental spending in addition to the effects it has on the deficit.

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Differentiating Instruction on the Deficit Panel: A Timeline and Graphics

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November 16, 2011

The New York Times has put together an interactive timeline of the significant events related to the federal budget talks preceding and succeeding the creation of the deficit panel.  This timeline gives a short summary of what happened on the day marked, a link to a complete article published on that day, and a chart or other visual representation of that particular day’s events or proposals.  This timeline lends itself to a number of lessons and in-class activities that will engage different types of learners.

Explaining the Timeline

The timeline begins at the bottom of the website on July 21 and then progresses to the deficit panel’s deadline: November 23.  Below is a short summary of the first and last point on the timeline. These summaries are provided in order to demonstrate how the timeline provides information:

On July 21, President Obama and Speaker John A. Boehner were working to complete a budget plan that would reduce the deficit by $3 trillion over ten years.  The graphic below the date details three alternative plans proposed to Congress: the McConnell-Reid Outline, the ‘Gang of 6’ Plan, and the Cut, Cap, and Balance Plan.  This chart provides a short summary and comparison of the three plans.

On November 23, the committee must present its plan to cut the deficit by at least $1.2 trillion over 10 years.  If the committee does not agree on a plan, automatic cuts will begin. Below the short explanation is a visual representation of the automatic cuts by area of the budget (defense, non-defense discretionary, nonexempt mandatory, Medicare, and exempt entitlements).  Each of these areas of the budget is explained further under its respective image.

Bringing the Timeline into Your Classroom

This timeline could be incorporated into your classroom in a number of ways.  One way would be to provide students with both the image presented on the day of the timeline and the complete article linked to that day.  While both provide similar information, each caters to a different type of learner.

As an activity, students can create a physical timeline on the ground of the classroom. On each point, there will be both a short summary and a visual/graphic summary.  Students may be split up into groups and asked to work on one date of the timeline using the information provided for that date.  Once the students have completed their own parts, they can put the timeline on the ground in order and take turns walking through it, engaging the students physically as well as intellectually.  As they walk through the timeline, they should read each summary and observe the image or chart connected to that day.

For homework, students may be asked to consider the part of the timeline they worked on relative to the entire chart: why did the New York Times believe that the day on which you worked was so important for understanding the progression of the government’s dealings on the deficit?  Would you have presented the information in the same way? Why or why not?

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Ideological Differences: Will the Deficit Panel Ever Agree?

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November 10, 2011

A recent article by Bobby Caina Calvan in the Boston Globe reports that the bi-partisan, deficit-reduction panel has temporary stopped meetings.  With only two more weeks until the panel’s November 23rd deadline, it is unclear if the panel will be able to agree on a plan before automatic cuts are instated.

Republican aides claimed that the Democrats had walked out of the meetings, while Democratic aides stated that both sides were still in conversation.  Regardless of which version of the story is correct, the most important issue is the ideological differences between Republicans and Democrats over how to reduce the deficit.

Over what do they disagree?

Calvan reports that the largest issue dividing Democrats and Republicans is whether or not this deal should include revenue increases – meaning, should the government try to collect more money as it cuts spending?  And even if both sides come to an agreement that new revenues should be included, both sides also need to agree on from whom the money should be collected.

Patrick Toomey, a Republican senator from Pennsylvania on the panel, suggested that the government could raise revenue by $300 billion by overhauling the tax code to reduce or eliminate many popular individual deductions while lowering tax rates, Calvan explains.

Democrats, however, rejected the plan.  They claimed that it simply was a tax cut for the rich.  The ongoing disagreement on this issue led to the supposed “timeout.”

Turning Your Classroom into the Deficit Panel

Depending on allotted class time for discussing the deficit, this article may be used as an introduction a class debate/reenactment of the Deficit-Reduction Panel.  Assign half the students to be Democrats and half the students to be Republicans.  Have them research the federal budget to find out the general breakdown of spending – what percentage of the budget goes to defense, education, etc., as well as the actual dollar amount for each of those parts.  It may also be helpful to give students some information about the amount of revenue the government collects each year and where it comes from.

After, have the students conduct research on the general position of their particular party on issues relating to the budget.  Then, ask each group of students to create their own deficit reduction plan with which they believe their political party would agree.  Make sure each group writes out a paragraph for each cut they make or type of taxes they plan to raise.

Finally, have the groups present their plans to each other.  Once each side has presented its plan, give students the opportunity to discuss and debate the merits of each side as if each student was a senator from that political party.  At the end, compare the students’ results to the panel’s actions.  How was the students’ debate similar to or different from that of the panel?  Were the students more accommodating to diverse opinions than the panel members seem to be to each other?

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Why Should Students Care about the U.S. Debt Panel?

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November 2, 2011

“It’s the economy, stupid,” the phrase popularized in the 1992 Clinton presidential campaign, may need slight revision.  Yes, it certainly is the economy, but right now, it’s the debt.  And while high school students are anything but stupid, they may need some reminding as to why they should care about the looming deadline for the Joint Selection Committee on Deficit Reduction

Heidi Przybyla’s recent article for Bloomberg explores the consequences of the automatic cuts if the Committee is unable to create an alternative.  James Jones, an Oklahoma Democrat, is quoted as saying: “I don’t think Congress on either end understands the consequence of their inaction… You’re creating a generational war.”

War? Who is fighting?

On one side, we have Social Security and Medicare; on the other, child health and education programs.  Though one may think that all of these programs will take a hit with the $1.2 trillion cut, some may be hit harder than others, Przybyla explains.  The programs that will be hit hardest, she posits, will be those serving the young. 

Why?

Przybyla points first to the strong lobbying of the AARP who, in the first six months of this year, spent $9.7 million on said lobbying.  Second, she notes the fact that Social Security and Medicare are “mandatory entitlement spending that automatically grows as the retiree populations increases,” while spending for many children’s programs is determined annually.  Furthermore, the Children’s Defense Fund, in stark contrast to the AARP, spent $48,245 during all of last year. 

Already, trends in federal spending indicate which generation has been “winning” this war: “In 2008, per capita federal spending on those 19 and younger was $3,660, compared with $23,900 for those 65 and older, according to a report by Urban Institute and Brookings in Washington,” reports Przybyla. 

How children may lose

 A recent study by the Federal Funds Information for States stated that the U.S. Department of Education may have its budget cut by $3.5 billion.  The Head Start program may lose up to $799 million.  The study also mentioned potential budget cuts for child welfare services and child-care. 

In the Classroom

This article introduces a number of important aspects of the political process.  Teachers may use this article to introduce the concept of “lobbying,” who lobbyists are, and how interest groups play a role in lobbying.

With regards to interesting the students in this current budget crisis, teachers may use this article to explore what it might mean for their particular school if the Department of Education lost that much funding.  Students may be asked to research how much money, on average, a school in their district receives, what percentage of the federal budget their district is, and then how much money their school could lose based on the cut.  The project could culminate in examining the costs of the school: how much the desks cost, the printers cost, etc., and what the school might not have without federal funding.

Have the students consider the following questions: how does the action (or inaction) of the federal government affect me?  How does it affect the nation as a whole?  If you were a member of the Congressional committee, what trade-offs (between Social Security and Medicare on one side, and child health and education services on the other) would you make? Would you try to cut equally from the benefits for seniors and children, or would you cut more from one than the other?  What information would you need to be able to make an informed decision?

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Super Committee Deficit-Reduction Meetings

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October 25, 2011

Richard Cowan, writing for Reuters, recently reported that party leaders are pushing members of the 12-member super committee to finish their work on a deal that would reduce the national deficit by 1.2 trillion dollars over the next decade. The super committee, created in August when Congress decided to raise the debt ceiling, has until November 23 to propose a plan or spending cuts will automatically occur in 2013. Many members of both parties, however, believe that the group has come to a standstill, a cause of extreme concern on behalf of party leaders. According to the article:

 

With the November 23 deadline coming more into focus, several congressional aides told Reuters that they thought party leaders in Congress will now become more engaged in the super committee’s work.

 

“Leadership has got to provide a little guidance” for the negotiations, the senior Republican aide said.

 

Cowan also states that the committee has met many times but little information has been presented to outside members. The committee is, however, focusing on controversial issues related to tax rates and government funding. Both parties have openly expressed their desires and fears involving the possible outcomes of the committee’s decisions. According to a House Democratic aide quoted in the article, “everything’s on the table” in the negotiations.


Teachers could use this article to discuss ways in which the government could reduce government spending and help students analyze the effects of these cuts. For example, on October 21, 2011, President Obama announced that American troops would leave Iraq by the end of the year, thus ending a war that cost the United States’ Defense Department nearly $757 billion over a decade. Could the President’s plan influence the super committee’s decisions about other expenditures for national defense? Why or Why not? To help students better understand the effects of these decisions, teachers could use interactive programs like Budget Hero (discussed in an earlier Understand Fiscal Responsibility blog) to challenge their students to critically examine the choices made in planning the federal budget.

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“Gang of Six” Seeks Compromise on Federal Budget

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March 22, 2011

Writing for National Public Radio, Scott Horsley outlines the efforts of a bipartisan group of senators that has been meeting “to focus on the longer term and how to deal with the government’s mounting debt.”  The senators (dubbed the “Gang of Six”) believe that the current focus on non-defense discretionary spending — only 12% of the federal budget — is not going to solve our nation’s fiscal problems.

The six senators contend that the government must begin “looking at defense, entitlement programs like Medicare and Social Security, and a wide variety of tax incentives.”  From the article:

[Senator] Chambliss (R-GA) says that to get a long-term handle on the government’s budget, those are the areas Congress needs to look at.

“For a Republican to put revenues on the table is significant. For a Democrat to put entitlements on the table is significant,” Chambliss says. “The only way we’re going to solve this problem is to have a dialogue about all these issues, because there is no silver bullet.”

The “Gang of Six” is working on building trust between the parties and attempting to bring both sides to the negotiating table.  Horsley writes, “Republicans will be more willing to raise tax revenue, and Democrats more willing to tinker with Social Security if there’s a sense that sacrifice is being shared.”  The willingness of their fellow party members to share in that sacrifice, however, remains to be seen.

Teachers could use this article to demonstrate the process of political compromise and the role of bipartisanship in complex fiscal decisions.  Students could be asked to research the progress of the “Gang of Six” and other bipartisan groups like the National Commission on Fiscal Responsibility and Reform, to see if they gain or lose influence as the 2012 elections approach.  Students should be encouraged to develop their own opinions about which group or party (or combination thereof) has the best plan for reducing the federal budget deficit and the national debt.

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Potential Consequences of Growing National Debt

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March 10, 2011

In a recent article in the Christian Science Monitor, Gail Russell Chaddock asks an important question:  “What happens if Congress doesn’t rein in the national debt?”.  Chaddock cites a series of politicians and policy analysts who use phrases like “crash landing” and “cataclysmic event” to describe scenarios in which the United States continues accumulating debt at current levels.

Erskine Bowles and Alan Simpson, co-chairs of President Obama’s bipartisan National Commission on Fiscal Responsibility and Reform, believe that “the reckoning will be sure and the devastation severe” should the United States fail to “put its fiscal house in order.”  Senator Kent Conrad, chairman of the Senate Budget Committee, contends that the country is “headed for the cliff.”  Senator Jeff Sessions of Alabama, fears that this “cataclysmic event… can happen very quickly… just like it did in Greece.”

Chaddock writes that the trigger for economic disaster could result from buyers’ refusal to purchase US Treasury bonds, leading to an increase in interest rates.  This would make it more expensive for the United States to borrow money, a fact that “could be ruinous” given the country’s high level of debt.  Citing economists Carmen Reinhart and Kenneth Rogoff, Chaddock reports “the danger point is reached when gross national debt equals 90 percent of annual gross national product.”  Nations who pass this threshold tend to have median economic growth rates 1 percent lower than countries with lower debt levels.  Chaddock concludes that it is impossible to know when the cataclysm might occur, but notes that “it has happened to countries whose debt, relative to the size of their economies, is less that that of the US.”

Teachers should encourage students to critically analyze the comments of the senators cited in the article.  Chaddock describes the economic effects of the national debt, but what are the human impacts?  What would it mean to American citizens if the US economy suffered the cataclysmic crash landing predicted in the article?  Are claims that the nation is “headed for the cliff” accurate, or do they simply fan the flames of partisan rhetoric?  Is the United States economy comparable to the economy of Greece?  Why or why not?

Students should also consider the “90 percent” statistic put forth by Reinhart and Rogoff.  Do all economists agree on this point?  What other opinions are available?  Teachers could refer to an earlier Understanding Fiscal Responsibility blog (“United States Debt Approaches 90% of GDP”) for more information about this statistic.

Based on these discussions, students should begin to realize that the national debt is a complicated issue with both economic and human implications.  As students develop their own opinions about how best to approach the United States national debt, they should be encouraged to explore multiple points of view and consider the results of fiscal policy decisions for both the economy and for American citizens.

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Protecting Social Security while Reducing the National Debt

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December 31, 2010

In a recent article for the Christian Science Monitor, David Francis describes the “frenzy” that America is whipping itself into as a result of the growing national debt.  The article cited a MacArthur Foundation poll that found 70 percent of midterm voters felt it was “very important” for Congress to work toward reducing the national debt, and an additional 24 percent felt it was “somewhat important.” Francis notes that while many feel Americans must “face up to hard times” and “punish themselves”, a plan designed by the Economic Policy Institute, Demos, and the Century Foundation strongly opposes “the idea that America’s fiscal challenges should be solved by cutting longstanding social insurance programs” like Social Security, Medicare, and Medicaid.  Rather than cutting these programs, their plan contends that the burden of debt reduction should fall to the wealthy.  From the article:

For example: Capital gains and dividends would be taxed the same as regular income at a marginal rate as high as 39.6 percent, instead of today’s 15 percent. Millionaires would also pay a Social Security tax of 5.4 percent on most income. (At present, only $106,800 of income is subject to the payroll tax.) Their heirs would be subject to a tax on estates exceeding $2 million. The $1 trillion in annual tax breaks – various credits, preferences, and deductions like the one for interest on mortgages – would be trimmed down for the rich.

Though the plan contends the deficit would be “manageable” by the year 2020, at that time federal revenues would equal 21.7 percent of GDP, compared to an average of 18.2 percent over the past fifty years.  In addition, the federal debt held by the public would increase from 66 percent of GDP to 83 percent of GDP, though the plan’s authors say this is acceptable because deficits will be under control.

Teachers could use this article to further inform students’ understanding of the multiple plans proposed for reducing the federal budget deficit and national debt.  Students could compare this plan with others put forth by President Obama’s bipartisan National Commission on Fiscal Responsibility and Reform, and the Bipartisan Policy Center’s report “Restoring America’s Future”  (Note: These two plans were discussed in an earlier blog on this website, “Two Plans to Address the Federal Budget Deficit“).  Students could develop a list of pros and cons for each plan, analyze the proposed balance of tax increases and spending cuts, and determine which constituencies stand to gain and lose from each plan.  Students should develop their own opinions about which of these plans (if any) they would support and discuss their reasoning with the class.

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