Mathew O. answered • 07/17/21
B.S. in Political Science
This is either an ideologically-motivated question or one that is construed so narrowly that you have to think about it in a creative way. They're asking you to "balance the budget" and are stipulating that NO increases are allowed, even if they are accounted for with an equivalent decrease in another area. That's not how budgets work at all! In reality, it's perfectly acceptable to suggest cutting the military budget by $1 million in order to increase the education budget by $1 million -- that's how budgets actually work and how it's done in practice in the US (just often in the reverse where decreases in social programs are redirected to the military).
This question, with its weird framing and requirements, has exactly one answer: cut expenditures and/or increase taxes. It's your job to decide how to do this. Federal revenues come in many forms, including individual income taxes, corporate income taxes, capital gains taxes, estate taxes, sales taxes, property taxes, import taxes, etc, etc. Federal expenditures (spending) are a bit more complicated. However, in general you can break it down into a few groups: direct operational costs (cost to run the capitol building, president's salary, etc), program funding that flows through the states (Medicare, Social Security, interstate highways, etc), and program funding that flows through federal departments (military budgets, grants such as Pell Grants given out by federal agencies, costs from agencies like OSHA and the FDA for enforcing health and safety standards, etc). The important distinction between these categories is in how easy it is to alter their expenditure amounts -- Medicare is a legal requirement, so to cut that would necessitate a law being passed; whereas many grant programs could be ended by the president with one phone call or an executive order.
The best interpretation of the question is that it's trying to get you to think of the federal budget as made up of all these individual pieces...and then ask you to decide which you believe are the most important. If you want to make you teacher happy, that is likely what they are looking for.
That said, I'm lazy, so I would want to answer it in the simplest way possible. And I have my own biases, which motivates me to think the easiest solution is to increase tax revenues by increasing the taxes on the ultrarich and on multinational corporations. The prompt stipulated that no taxes be taken away, but that doesn't limit us from proposing closing existing tax loopholes like the ones corporations use to hide their profits in foreign "tax-haven" countries -- closing a tax loophole is functionally the same as adding a new tax. Then, if those revenues aren't enough to make up for our existing expenditures (because remember, no increases are allowed, so the best we can hope for is to not decrease them!) we could impose a graduated wealth tax on the ultrarich. The one proposed by senator Elizabeth Warren in her 2016 campaign is a good example of one way that this could work. Instead of taxing income, we tax net worth (which includes assets such as real estate, stocks, and art, among others) -- any of your net worth that is above $50 million gets taxed at a 2% rate and any that is above $1 billion gets taxed at a 3% rate. We'd have to have the actual numbers to know what tax rates here would perfectly balance the budget, but the estimates put these numbers at $2.5 trillion over 10 years, so we'd likely need no more than 10% even in the worst case. That's only a few sentences, so it would leave me plenty of space to explain why this is a better idea than cutting funding for programs like SNAP and HeadStart that poor children rely on to live.
Like I said, this question is either ideological and wants you to think that this is how the federal budget works (it isn't) OR it's a creative way to help you consider all of the individual parts and the additional requirements (like how Medicare is a law but many grants are programs of the executive branch). In any case, this isn't at all how the federal budget works. Here, suggesting cutting the military budget to pay for roads would get you a zero on the assignment, but in reality it's a perfectly possible thing to do -- it's just up to us and those we elect to decide whether we want to go that route or do some other thing instead. Historically we've been doing some other things instead, but that's a value judgement, not a requirement of the federal budgeting process.
P.S. -- If you want your head to really spin, look up "Modern Monetary Theory (MMT)." Some economists think the whole notion of needing to "balance" the federal budget might be unnecessary entirely!
