Economic+Policy+Briefing

1. Top 5 Economic Issues: • Unemployment • Inflation • Credit • Public Debt • Social Security funding [] 2. Main Economic Issue: Public Debt; Federal Deficit 3. The Federal debt was caused by the government cutting taxes and increasing spending or in other words, the government’s continuous federal deficits. The economy and voters benefited from deficit spending. Usually, however, holders of the debt want larger interest payments to compensate for what they perceive as an increasing risk that they won't be repaid. This added interest payment expense usually forces a government to keep debt within reasonable limits. The U.S., however, has been the beneficiary of two unusual factors. The Social Security Trust Fund took in more revenue through payroll taxes leveraged on Baby Boomers than it needed. The Fund was "loaned" to the government to finance increased deficit spending. This interest-free loan helped keep Treasury Bond interest rates low, allowing more debt financing. However, it's not really a loan, since it can only be repaid by increased taxes when the Boomers do retire. Also, foreign countries increased their holdings of Treasury Bonds as a safe haven, also keeping interest rates low. [] 4.The main industries impacted: petroleum, steel, motor vehicles, aerospace, telecommunications, chemicals, electronics, food processing, consumer goods, lumber, and mining. [] 5. The federal deficit impacts the entire United States. [] 6. The younger generation is impacted in the sense that they will need to pay for the past debt in the future. The older population is impacted in that social security and Medicaid is decreasing because the government cannot afford to support them due to their need to cut programs because of the outstanding debt. [|http://www.greatreality.com/DebtFAQ.htm#OweGeneration] 7. Estimated Economic Cost of Federal Deficit In 2011, the federal deficit will exceed $1.4 trillion in 2011. [] 8. Estimated Cost of Reform/ expand the way it is funded/ addressed Billions of dollars. Currently, by the Bush tax cuts being extended by the Obama administration, alone would cost the government about $300 billion dollars. This is part of the plan to help. With help in reform, the Obama administration still predicts that the federal deficit will reach around 9.05 trillion dollars by 2013. [] 9. Estimated cost if not fixed Without any fixings, it was said that the deficit would increase to $4.4 trillion in March 2011. [] [|**amvf1**] 10) • Kill the Defense Department alternate engine program for the Joint Strike fighter. The House of Representatives authorized $485 million for the engine in H.R. 5136, the FY 2011 Defense Authorization Act. Since 2004, Congress has earmarked more than $1.2 billion for the engine. • Eliminate funding for the Pentagon's C-17 transport. This would result in a one-year savings of $400 million and a five-year savings of $2 billion. • Reform the Agriculture Department's milk marketing orders program and deregulate milk pricing. This would result in a one-year savings of $1.15 billion and a five-year savings of $5.75 billion. • Eliminate the Commerce Department's Economic Development Administration that helps U.S. regions in foreign trade. This would result in a one-year savings of $201 million and a five-year savings of $1.081 billion. • Replace the $1 bill with a coin. This would save taxpayers $522.2 million per year. • Eliminate the Agriculture Department's sugar subsidy. This would result in a one-year savings of $160 million and a five-year savings of $800 million. []
 * __ Economic Policy Briefing  __ **

11) “We can’t cut our way out of it. People say, ‘Oh, well, let’s just cut the budget.’ If you just rely on deficit reduction through cutting, and you want to exclude Social Security, Medicare and defense and, of course, interest, then you’d have to cut everything else by about 60 to 65 percent. You can’t do that, either,” Erskine Bowles (National Commission on Fiscal Responsibility and Reform’s co chair man) said. “What we’ve got to do is some combination. Alan Simpson and I have come out with a plan that’s balanced that takes $4 trillion out of the deficit over the next 10 years. I think that’s the kind of thing we have to do. And if we don’t, the markets are going to force us to.” []

12) A Republican plan to extend the tax cuts for the wealthy would result in more than $36 billion being added to next year’s federal deficit – and that money would go into the pockets of millionaires. []  