Content Tagged: fiscal responsibility

Understanding Fiscal Responsibility Curriculum Launch

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April 25, 2012

Teachers College, Columbia University
Understanding Fiscal Responsibility
Curriculum Launch Event
May 2, 2012
6:00 to 8:00 pm
Milbank Chapel



Anand Marri, Associate Professor of Social Studies, Teachers College


Susan Fuhrman, President, Teachers College


Peter G. Peterson, Chairman and Founder, The Peter G. Peterson Foundation

Video Presentation of the Curriculum

Anand Marri and Kathryn Swallow


A Conversation on Engaging Students in the Nation’s Fiscal Challenges


Elizabeth Willen, Director, Hechinger Institute on Education and the Media


Charles Calomiris, Henry Kaufman Professor of Financial Institutions,

Columbia Business School

Peter Orszag, Vice Chairman of Global Banking, Citigroup, Inc., and

Former Director, Office of Management and Budget

Judith Johnson, Retired Superintendent, Peekskill, NY, Public Schools

Audience Q&A


Everett Lounge

RSVP Today


The End of Bipartisanship?

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March 20, 2012

Though the budget is always a contentious issue, most members of Congress thought that it was last year’s issue.  A number of Republicans want to renege on deal made months ago with Democrats, reports Steve Benen for Rachel Maddow’s MSNBC blog.

A number of conservative Republicans have expressed concern that government-spending levels still are too high despite last year’s extensive debt-limit debate.  A few weeks ago, Majority Leader Eric Cantor (R-Va.) met with a number of Republicans who no longer support the August agreement and urged them to reconsider their position.

Benen reports that meeting did not come to any resolution, and that the group plans to “submit a budget resolution with spending levels below the agreed-upon levels.”  Benen goes on to say that despite the fact that Democrats will reject this alternative plan, the GOP still plans to pick a fight.

A possible government shutdown is imminent, warns Benen.  When the Congressional Budget Office provides with Budget Committee with estimates for the upcoming year (expected for next week), the Committee will consider how to proceed.  Those numbers will help the Budget Committee determine how to approach both parties.

Many congressmen have expressed frustration that GOP members are considering ignoring their party’s leadership. As such, Benen quotes Sen. Patty Murray (D-Wash.):

If House Republicans walk away from the agreement their own Speaker made less than a year ago, then they will show that a deal with them isn’t worth the paper it’s printed on…Republicans are playing with fire here, and I urge them to not cave to their most conservative members and to stick to the budget levels we already agreed to last year.

In the Classroom

This article lends itself to a discussion on bipartisanship in Congress.  The teacher may want to structure the lesson around an examination of the Democratic Party’s ideology for government spending and taxation in comparison to that of the Republican Party.  Is there any area of the budget on which the two parties agree?

The teacher also could create a structured debate in which the students are asked to create and then compromise on a budget.  First, students should be given a chart of the general sections of the budget.  Then, the students should be split into Republicans and Democrats and then asked to spend some time creating a budget according to their party’s ideology.  Have each group present their budget to the other and then examine the differences.  Finally, ask students to attempt a compromise without straying too far from their party line.  Whether or not they reach a compromise, the struggle within the discussion to reach that point should demonstrate to students why bipartisanship is never simple and why it may isolate the extreme members of either party.


A More Transparent National Debt

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January 17, 2012

When you take out a mortgage on your home or a student loan to pay for college, you generally are required to pay back that loan with interest through monthly installments spread over a specified number of years. As an individual, you may choose to create a monthly budget for yourself that indicates all of your ongoing and long-term expenses.

When the federal government needs to pay for a war or its employees or Medicare, it issue bonds (which essentially is borrowing money as a loan) to pay for those expenses.  Furthermore, when the federal government creates a budget for itself, it does not include the cost of borrowing or ongoing expenses beyond that fiscal year.  Bruce Bartlett, writing for the New York Times Economix blog, reports on the much larger deficit this country faces beyond what the single year tally indicates.

In this article, Bartlett first provides the history for the way in which the government reports its current and long-term debts.  He explains that the federal government did not publish a “consolidated financial statement” until 1977, despite the fact that the Hoover Commission had recommended that the government provide such a report as early as 1949.

The consolidated financial statement was succeeded by what is currently titled: The Financial Report of the United States Government. The Treasury’s Financial Management Service published this year’s report on December 23, 2011.  Bartlett surmises that this day was picked strategically, because most reporters would be preparing for the holiday rather than reading this 254-page document.

Bartlett summarized the report as follows:

According to the report, the federal debt – simply the cumulative value of all past budget deficits less surpluses – was $10.2 trillion on Sept. 30.  But the government also owed $5.8 trillion to federal employees and veterans.  Social Security’s unfunded liability – promised benefits over expected Social Security revenues – was $9.2 trillion over the next 75 years, or about 1 percent of the gross domestic product.  Medicare’s unfunded liability was $24.6 trillion, or 3 percent of G.D.P.  Altogether, the Treasury recons the government’s total indebtedness at $51.3 trillion – 5 times the size of the national debt.

Bartlett goes on to say that the report demonstrates that the largest growth in future federal spending will be in the interest owed on the debt, rather than in government programs as is commonly assumed.

Teachers may use this article to discuss the ways in which the federal government creates and considers its yearly budget.  If the students were in charge of redesigning the way in which the government reported its budget, how might they include the long-term projections of the deficit as well as the short-term ones (if they chose to include both)? Why might it be important to consider the long-term costs of borrowing money?


The Atlantic’s Guide to the U.S. Debt Crisis, Part III

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December 21, 2011

This post concludes the three part series related to The Atlantic’s recent article by Charles Davi.


Medicare is a government-funded program that offers health care to any U.S. citizen over the age of 65, the disabled, and some individuals who qualify under specific circumstances.  Medicare pays for 80% of all approved medical costs.

As Davi explains, Medicare is paid for through three sources of Government income: a Medicare payroll tax, premiums paid by beneficiaries, and the federal government’s general revenue.  As explained earlier, as the population which qualifies for Medicare increases over the next few years, the costs of the program will grow at a greater rate than the first two sources of income.

Medicaid and the Children’s Health Insurance Program (CHIP)

Medicaid and CHIP provide health care to low income and low net worth families and individuals.  Both programs vary widely by state and are funded by both the federal government and individual state governments.  The federal government determines how much it contributes to each state based on that state’s overall wealth.  Davi gives a few examples in his article.

Social Security

Social Security, the most expensive program in the federal budget, provides income to retired workers (and their survivors and dependents) and disabled workers (and their dependents).  Most individuals qualify by the age of 67, and the amount of income they receive is determined by a number of factors, including lifetime earnings.

The government funds Social Security through the Social Security payroll tax (split between employer and employee).  A small portion of it (about 4%) is also funded through taxes on Social Security benefits paid to “high earning” individuals.

What Are the Options for the Future?

According to Davi, the Government has only three options for decreasing the national debt: “Increase revenues, reduce outlays, or make use of some combination of the two.”  Davi sees the third option as the only realistic one and predicts a future of tremendous trouble without a concrete commitment to bringing down the national debt.

Bringing the Article into Your Classroom

In concluding this article in your classroom, a number of evaluative questions arise: Should the government continue providing the services described in this article when such provisions continue (and will continue) to increase the national debt? What are our responsibilities as a nation to provide these services?  What might the country look like if they were not provided?


The Atlantic’s Guide to the U.S. Debt Crisis: Part 1 of 3

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December 6, 2011

In less than a year, citizens of this country will vote for the next President of the United States.  While there are many issues that this country faces, no issue is larger than the national debt.  Literally.  With these two ideas in mind, Charles Davi, writing for the Atlantic, created a “Glossary and Guide to the Key Issues in 2012” pertaining to the U.S. debt crisis.

In this guide, Davi has provided a number of terms and explanations that often come up in discussions and debates on this country’s economic future.  The upcoming Presidential debates only will magnify the amount the debt crisis will come up in the news.  Below, I have provided a summary of the main points of the first half of his glossary and guide.  I will cover the rest of his glossary over the next two weeks:

The Budget

In this section, Davi first explains how the United States budget works, a yearly undertaking around the beginning of every calendar year.  First, the President creates a budget plan and submits it to Congress. Congress then debates (and frequently modifies or changes) the plan and sends it back to the President once the plan has passed through both chambers of Congress.  The President then has the power to sign or veto it.

Davi then explains how the U.S. Treasury works and defines the terms “appropriations” and “outlays.” The main idea he emphasizes is that while Congress and the President create the budget, the Treasury enacts it by borrowing, spending, and collecting money.  After, he provides a comprehensive explanation for the government’s yearly cash flow – whether the government is running a deficit or a surplus in a given year and why that happens according to basic economics theory.

The explanations begin to get more complicated when Davi describes the way in which the government borrows money in order to spend beyond what it collects.  He explains that when the government plans to spend more than it has, it borrows money from the public by issuing debt securities, most of which are treasuries.  With this point, Davi provides a graphic definitely worth including in any lesson on this point in order to differentiate for visual learners.

These treasuries, whose aggregate value roughly equals the Government’s budget deficit for that year, are then sold through auctions conducted by the Treasury and the Federal Reserve Bank of New York.  Rather than bidding their cost, however, investors bid through interest rates – whoever bids the lowest owns the treasury.  The cost of these treasuries for the Government (which is the interest paid on each treasury) thus depends on how competitive the bids are.

From here, Davi now has a comprehensive explanation for the national debt: an aggregate of all of the money the government spends beyond what it collects.  The debt, unlike the deficit, is not calculated yearly. Rather, it is a sum of every year’s deficit.  Davi provides another graphic to demonstrate this idea, which again gives teachers an opportunity to differentiate instruction on this point.

Bringing this Article into Your Classroom

This article provides a comprehensive explanation for how the government’s budget works.  One math and economics activity you could do with students is to create a fictional country for which the students will need to create a budget.  Give them a fixed amount of money to spend as well as fixed amount they may collect from taxpayers (an amount much less than the money they must spend).  Give them a list of things on which they must spend (health care, defense, education, etc.), so that they may decide what percent of the budget will go to which sector.

Then ask them to finance their budget. Will they issue treasuries? How will they do that? Are there any other ways to collect money?

An alternative to this activity if your classroom has access to computers for the students is to play the game Budget Hero.  This game gives students the opportunity to determine on which sectors the government should spend money, and how much.

As a follow-up and an introduction to the second half of the article, ask the students what they would do if, on top of the budget deficit they are facing, they also have debt from the previous year’s treasuries. How will they pay back those treasuries with their interest?

Next week’s post will discuss the national debt in more depth, including what it means for the Government to refinance its treasuries each year, on what the Government is spending, and where Davi thinks the country is heading.


Complex Economic Decisions and Economic Common Sense

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July 8, 2011

Paul Krugman’s recent article in the New York Times argues that Democrats should be very worried about the proposed spending cuts President Obama is considering to reduce the national debt.  Krugman concedes that we do not know exactly what President Obama proposed, but reports suggest he is offering “huge spending cuts, possibly including cuts to Social Security and an end to Medicare’s status as a program available in full to all Americans, regardless of income.”

Krugman believes this proposal is evidence of a shift to the right by President Obama, and claims that recent speeches by the President could lead one to conclude that “he basically shares the G.O.P.’s diagnosis of what ails our economy and what should be done to fix it.”  In his July 2 weekly address, President Obama made the following statement:

Government has to start living within its means, just like families do.  We have to cut the spending we can’t afford so we can put the economy on sounder footing, and give our businesses the confidence they need to grow and create jobs.

Krugman argues that with this statement the President endorsed “three of the right’s favorite economic fallacies in just two sentences.”  Krugman continues:

No, the government shouldn’t budget the way families do; on the contrary, trying to balance the budget in times of economic distress is a recipe for deepening the slump. Spending cuts right now wouldn’t “put the economy on sounder footing.” They would reduce growth and raise unemployment. And last but not least, businesses aren’t holding back because they lack confidence in government policies; they’re holding back because they don’t have enough customers — a problem that would be made worse, not better, by short-term spending cuts.

Previous Understanding Fiscal Responsibility blogs have discussed “Expert Opinion and Common Sense” and “Economic Common Sense“.  Paul Krugman’s critique of President Obama’s proposal and weekly address presents teachers with another opportunity to discuss these important issues.  Many politicians argue that if families and individual citizens must balance their budgets, the US government should be forced to do the same.  Common sense dictates that spending more than you have is not a recipe for financial success.  But is this “common sense” argument applicable to the federal government?  How does Krugman answer this question?  How would those opposed to Krugman respond?  Are there areas for compromise between these two positions?  As students discuss these questions, they will begin to better understand the similarities and differences between individual and national approaches to responsible budgeting, spending, and borrowing.


Opposing Viewpoints about Deficit Reduction

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April 19, 2011

In a recent article in the Christian Science Monitor, Mark Trumbull compared the debt plans released by Rep. Paul Ryan, chairman of the House Budget Committee, and President Barack Obama.  Trumbull reported that there are similarities in the plans, including “big spending cuts, a form of automatic trigger if Congress fails to act, and reforms to entitlements like Medicare.”  Despite these similarities, Trumbull wrote, the differences are “clear and significant.”  He goes on to describe five key differences in greater detail:

  • Taxes – President Obama’s plan “would include roughly $1 of new tax revenue for every $3 in spending cuts.”  In comparison, Rep. Ryan’s plan “would consolidate tax brackets and reduce the top individual rate from 35 percent to 25 percent.”  Both sides want to simplify the tax code, but Democrats hope to increase the government’s revenue, while Republicans want the reforms to be revenue-neutral.
  • Size of Government – President Obama’s plan matches the recommendations of the bipartisan commission on fiscal responsibility, seeking to save $200 billion in federal spending.  Rep. Ryan’s plan proposes much deeper cuts to the federal government, cutting $923 billion initially, and an additional $1.8 trillion by 2022.
  • Federal Safety Net – Rep. Ryan’s plan seeks to cut federal programs like food stamps, arguing that states need incentives to ensure that adults who receive food stamps are working, looking for work, or training for new jobs.  President Obama took a different approach, arguing that “we would not be a great country” without programs that help those in need.
  • Medicaid – Rep. Ryan would convert Medicaid spending into a block grant to be distributed by each individual state.  He believes this flexibility would save $735 billion by 2022.  President Obama is opposed to Medicaid block grants, but does hope to make Medicaid more flexible, efficient, and accountable, ultimately saving $100 billion over the next 10 years.
  • Medicare – Rep. Ryan seeks to transform Medicare into a “premium-support” system in which the government would pay a portion of seniors’ insurance premiums.  Ryan argues that his plan is not a voucher program, but would limit federal spending in a similar way.  President Obama sharply criticized this idea, saying that it would drastically increase seniors’ health care costs and “end Medicare as we know it.”  President Obama’s plan seeks to save $200 billion over ten years through lowering prescription drug costs and revising payment systems for doctors and hospitals.

Teachers could use this article to help students identify the differences between the deficit reduction plans proposed by President Obama and Rep. Ryan.  In the previous Understanding Fiscal Responsibility blog, it was suggested that students could make posters outlining the details of both plans.  Using the facts from those posters along with the information in this article, students could create a Venn diagram noting the similarities and differences between the Obama and Ryan proposals.  This diagram could be posted alongside the posters to create a “fiscal information wall” in the classroom, which students could refer to throughout the budget debate.


Determining our Fiscal Policy Priorities

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February 18, 2011

In two recent op-ed columns in the New York Times, Paul Krugman laments the shallow discourse and overall focus of the budget debate in Washington.  In the first article, Krugman decries deficit hawks’ willingness to sacrifice the future in return for spending cuts in the present; in the second, he calls the entire debate a “sham” for ignoring the real problems facing the federal budget.

Krugman cited a survey conducted by the Pew Research Center, noting that Americans “want more, not less, spending on most things,” that they are “evenly divided about spending on aid to the unemployed and – surprise – defense,” and that the only clear consensus is about cutting foreign aid, “which most Americans believe, wrongly, accounts for a large share of the federal budget.”

From this data, Krugman concludes, “Republicans don’t have a mandate to cut spending; they have a mandate to repeal the laws of arithmetic.”  From the article:

The new House majority promised to deliver $100 billion in spending cuts — and its members face the prospect of Tea Party primary challenges if they fail to deliver big cuts. Yet the public opposes cuts in programs it likes — and it likes almost everything. What’s a politician to do?

The answer, once you think about it, is obvious: sacrifice the future. Focus the cuts on programs whose benefits aren’t immediate; basically, eat America’s seed corn. There will be a huge price to pay, eventually — but for now, you can keep the base happy.

Krugman goes on to outline the GOP’s proposed cuts, including “a billion dollars from a highly successful program that provides supplemental nutrition to pregnant mothers, infants, and young children… $648 million from nuclear nonproliferation activities… [and] $578 million from the I.R.S. enforcement budget…”  Krugman contends that these cuts “can deliver the instant spending cuts Tea Partiers demand, without imposing too much immediate pain on voters.”  The GOP proposal, he concludes, “would save remarkably little money but would do a remarkably large amount of harm.”

In the more recent article, Krugman continues this argument, calling the entire budget debate “a sham.”  He includes both parties in his critique, writing that President Obama has been “making a big deal out of a freeze on nonsecurity discretionary spending, which accounts for only 12 percent of the budget.”  Still, Krugman argues, the President “deserves much more credit for fiscal responsibility than he’s getting.”  From the article:

What would real action on health look like? Well, it might include things like giving an independent commission the power to ensure that Medicare only pays for procedures with real medical value; rewarding health care providers for delivering quality care rather than simply paying a fixed sum for every procedure; limiting the tax deductibility of private insurance plans; and so on.

And what do these things have in common? They’re all in last year’s health reform bill.

Krugman concludes this article by noting that “even if we manage to rein in health costs, we’ll still have a long-run deficit problem,” arguing that part of the gap between spending and revenue must be covered with increases in taxes.  Krugman contends that we will not have a “real debate” about the budget until the deficit is seen as something more than “purely a spending issue.”

Teachers could use these articles to help inform classroom discussion about the federal budget process, including which items in the budget deserve the focus of our attention.  This is a difficult debate, with valid arguments posed from both Democrats and Republicans.  Students should be encouraged to examine the diverse proposals for fiscal responsibility advocated by the various stakeholders in the budget debate.

Previous Understanding Fiscal Responsibility blogs have discussed non-defense discretionary spending, the health care debate, options for Social Security reform, and ways to protect Social Security while reducing the national debt.  Students could explore the opinions referenced in these blogs along with the reports of the bipartisan National Commission on Fiscal Responsibility and Reform and the Bipartisan Policy Center.  These resources, along with others that students’ identify in their own research, could help students begin to develop their own opinions about the items in the federal budget that deserve the most attention and should be the focus of the debate.


A Note From Professor Anand Marri: Principal Investigator, Understanding Fiscal Responsibility

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February 10, 2011

The goal of the Understanding Fiscal Responsibility project (UFR) is to enable students to understand the complexities of the federal budget, national debt, and budget deficit. The UFR lessons help students clarify their own thinking about these topics, and, ultimately, to care enough to become active citizens, involved in these and other public policy issues.

Like “Teaching The Levees: A Curriculum for Democratic Dialogue and Civic Engagement”, a Teachers College, Columbia University-designed curriculum published four years ago, we aim to engage students in critical questions of public policy – questions that, as citizens, they should be involved in answering. The Levees Curriculum explored the role race, class, and poverty played (or did not play) in shaping public policies linked to the devastating impact Hurricane Katrina had on New Orleans.

The Levees curriculum asked, “What kind of country are we? What kind of a country do we want to be?” These essential questions have multiple, competing answers, allowing students to explore diverse solutions to difficult problems.  In a similar manner, the UFR curriculum asks, “How should we address our nation’s fiscal challenges today and in the future in a manner that is consistent with our values and traditions?” In answering this core question, students identify and evaluate differing points of view on the issues and develop their own ideas about the meaning of fiscal responsibility.

The UFR curriculum explores the impact of public policy decisions related to the federal budget, national debt, and budget deficit on the fiscal health of our country.  It also explores the collective responsibility we have assumed, or believe we should assume, for the medical care and economic well being of all Americans. Like the Levees curriculum, this exploration is framed as a series of questions that ask students to consider more narrow public policy questions in the context of the national identity to which we aspire.

The final version of the UFR curriculum will be published in early 2012. Excerpts of the curriculum presented at a recent national education conference received positive feedback from high school teachers and administrators.  The pilot version of the curriculum has been, and will continue to be, vetted by an independent national advisory board of experts. Further, the pilot curriculum is currently undergoing rigorous evaluation by high school social studies and mathematics teachers across the United States. Their evaluations will help to shape the final version of the curriculum.  We also invite teachers to comment on the lessons and topics discussed on this blog as we examine the national discourse surrounding fiscal policy and identify ways to involve students in these discussions.

Anand R. Marri, Ph.D.
Assistant Professor, Department of Arts & Humanities
Principal Investigator, Understanding Fiscal Responsibility Project
Teachers College, Columbia University


The Human Impact of Federal Budget Cuts

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February 9, 2011

Terrance Heath, writing for the progressive Campaign for America’s Future, recently published a response to Rand Paul’s plan to cut $500 billion from the federal budget.  Senator Paul’s plan (discussed in an earlier Understanding Fiscal Responsibility blog) seeks to make cuts to several federal agencies including the Departments of Education, Energy, Housing and Urban Development, and Homeland Security.  Heath argues that Paul and other conservatives “lack the courage to state clearly the human impact of their budget cuts, and the candor to confess the unreality of their proposals.”  From the article:

It’s almost impossible to cover all of the human consequences of Sen. Paul’s proposed cuts in one blog post, as they would impact millions of Americans across the country. But the reality is that the programs he and other conservatives want to cut are designed to solve specific problems that real people are having. The GOP has all kinds of plans to reduce, cut, or eliminate these programs and much-needed services they provide but no plans to replace them.

An editorial in the Lexington Herald, cited by Heath, noted the impact these cuts would have on Paul’s Kentucky constituents.  Among other facts, the editorial noted:

Kentucky last year received $147 million through the Individuals with Disabilities Education Act, money that educates disabled children and that would go away if Paul had his way…  Also lost to Kentucky would be $435 million for schools with high percentages of low-income students and $7 million through the Carl D. Perkins Career and Technical Education Act…

Teachers could use Heath’s blog and the editorial from the Lexington Herald along with Senator Paul’s article in the Wall Street Journal to inform a classroom discussion about the human impact of cuts to the federal budget.  Teachers could ask students to consider the following questions:  What sacrifices (if any) are we willing to make in order to balance the budget?  Who should bear the burden of those sacrifices?  Are some areas of the budget off limits?  Why or why not?  What leads you to that opinion?  What are the long-term effects of that decision on the federal budget deficit and the national debt?  What are the long-term effects of that decision on Americans’ quality of life?

As with the simulation described in the previous Understanding Fiscal Responsibility blog, students should understand that there are multiple competing answers to questions about the federal budget.  Various stakeholders in this discussion will have different goals and desired outcomes.  Students should be encouraged to develop their own opinions about the federal budget and to justify their ideas with logic and evidence.