Content Tagged: state

The Economist Addresses the Budget Deficit

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February 13, 2010

A recent article in The Economist argues, “Neither the president nor Congress shows any sign of knowing how to tackle the deficit.”  Citing unemployment statistics and data concerning the deficit as a percentage of GDP, the article makes dire predictions about Washington’s willingness and ability to address this issue.

A classroom examination of this article should explore the consequences of constitutionally mandated state budgets.  From the article:  “Most states are legally barred from running deficits, so when their revenues fall in times of recession they make painful cuts, firing workers and ending programmes—thus exacerbating the downturn rather than offsetting it.”  Students should discuss the implications of this statement.  In what ways can balanced budgets do more harm than good?  What are the positive aspects of requiring balanced budgets?  What might this look like on a national scale?

Another avenue of exploration would be to begin talking about the topics politicians seem fearful to touch.  The article claims, “No one dares touch defense, in a troubled world. The Social Security pension scheme is deemed sacrosanct by nervy politicians.”  Is this true?  If so, why?  What changes might the government have to make to change these attitudes?  This discussion could lead into a lesson about why fiscal policy is often difficult to create.