Required Resources
Read/review the following resources for this activity:
- Textbook: Chapter 27, 28, 30
- Lesson
- Minimum of 1 scholarly source (in addition to the textbook)
Optional Resources
- Link (website): U.S. National Debt Clock (Links to an external site.)
Introduction
The federal debt is symptomatic of the nation’s persistent budget deficits as the national debt is the accumulation of budget deficits. Deficits grew steadily during the Great Recession when there was a significant shortfall in government revenue, which required that the government pursue an expansionary fiscal policy to stimulate the economy. The recession is now over, but the Trump administration, continues to pursue deficit spending. In a contribution to Forbes magazine, Chuck Jones (2018) points out that the U.S. Federal deficit was $587 billion in Obama’s last year in office, and it grew to $666 billion in the first year of Trump’s presidency. The Trump Administration’s Tax Reform plan and the two-year bipartisan budget, which passed in February 2018, are estimated, by many accounts, to cause the federal deficit to exceed 1 trillion dollars by 2020 (Jones, 2018). The implication of this growing deficit is a further increase in the national debt.
From 1965 to through 2019, there has been a persistent increase in the federal debt. This trend became more pronounced during (and in the aftermath of) the recession of 2008-2009. As shown on Figure 1, in September of 2017, for example, the national debt rose to 20.24 trillion U.S. dollars. This disturbing increase in the federal debt is likely to increase the per capita debt burden for each American citizen. According to Statistica (2018), if the debt owed in 2016 were distributed to every American citizen, the amount owed per capita would be 60,470 U.S. dollars. The current figure is available at the U.S. National Debt Clock website.
Figure 1: Federal Debt: Total Public Debt
As the U.S. federal debt increased over the years, so did the federal debt as a percentage of GDP. From 1965 to 2018, there has been a general increase in the federal debt as a percentage of GDP. Remarkably, this increase was very pronounced during (and in the aftermath) of the recession of 2008-2009, after a brief decline from 1995 to 2002. As shown on Figure 2, in the fourth quarter of 2017, the Debt to GDP ratio was 104%. The ratio compares what the U.S. owes to what it produces, and it serves as an indication of the U.S.’s ability to pay its debt. This number can also be interpreted as the number of years it would take for the U.S. to pay back its debt if the nation’s GDP is used entirely to pay back its debt (Statistica, 2018).
Figure 2: Federal Debt: Total Public Debt as a Percent of GDP
Initial Post Instructions
For the initial post, address the following:
- Do you agree that the constitution should be amended to include a balanced budget requirement? Why or why not?
- If you agree with a constitutional amendment, can you identify one reason why some people may be opposed to it? What proposals would you make to allay the concerns of those people?
- If you disagree with a constitutional amendment, can you identify a line of argument – made by the proponents of the constitutional amendment – that you find compelling? What do you find persuasive about that line of argument?
Follow-Up Post Instructions
Respond to at least one peer. Further the dialogue by providing more information and clarification.
Writing Requirements
- Minimum of 2 posts (1 initial & 1 follow-up)
- Minimum of 2 sources cited (assigned readings/online lessons and an outside scholarly source)
- APA format for in-text citations and list of references
SOLUTION
Constitution Amendment and Balanced Budget Requirement
All states in the U.S, apart from Vermont, has got some provision to the balanced operating budget. The requirement to this effect varies from one state to another; Indiana, for instance, has a prohibition on debt with a ‘casual and temporary’ exception with no balanced requirement for a budget. It is not a legal requirement for the governors to submit a balanced budget nor the state or the legislature (Greenlaw et al., 2017). Oregon kicker, an unusual variant, bans surplus that exceeds 2% in terms of revenue and refund to the taxpayers. State balanced budget needs do not usually apply to states’ capital budgets that specifically give states the authority to employ their debt capacity of financing long-term debt financing.
Constitution Amendment and Balanced Budget
There has never been a balanced provision of a balanced budget in the United States’ constitution; hence no need to have one since the federal government does not pass one. Please click the purchase button to access the entire copy at $5