Try your hand at
balancing the federal budget by trying the National Budget Simulation.
Go to the Budget Simulation at
www.nathannewman.org/nbs/shortbudget06.html.
The link will take you to the beginning of your budget where you will see a list of budget items.
The items are divided into the following categories.
spending items – the items you will spend money on
tax cuts – the amount of money you will not get (that you might otherwise have gotten) because you lowered (cut) taxes for some or all taxpayers
tax expenditures – unofficially referred to as tax loopholes, these are tax expenditures for specific political goals that are paid for by either deficits or higher taxes on the general population … little different from general spending, aside from the fact that the money is spent with less accountability
What distinguishes a tax expenditure from a general tax deduction? Special tax provisions are referred to as tax expenditures because they are considered to be analogous to direct outlay programs ... Tax expenditures are most similar to those direct spending programs which have no spending limits and which available as entitlements (Congressional Joint Committee on Taxation).
Each budget item is a hot link to a general explanation of what that item involves. Each budget item has a drop-down menu next to it that allows you to make changes to that budget item.
At this point you have no idea what dollar amounts are associated with which budget items. That's okay. It's a good test of whether your perception of where money goes in the budget matches reality.
Work your way down the page changing or maintaining each budget item as you wish.
Just remember: increasing any category, whether a spending category or a revenue category, will increase the deficit, while cutting any category will decrease the deficit.
When you reach the end, click on the Find Out What The Budget Is link.
You will then see the results of your changes:
old budget total
new budget total
how your changes affected the deficit & the new deficit total
a graph showing your distribution of spending and tax expenditures
a list of the budget items, the change you made to each and the dollar amount for each
At the bottom of your results click on the Tinker With Your Budget link and go back to your starting point.
Now that you have a realistic idea of the dollar amounts involved and how your first changes affected the budget and deficit, try it one more time. Work your way through the budget items, click on the link to get your results, and see how things differ your second time through.
After working through the entire process at least twice, reflect back on what you did, why and how successful you were. Send me a
summary of your experiences with the simulation that addresses the following questions.
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Were you successful in balancing the budget? If not, how much of a deficit or surplus did you end up with? What does this exercise tell you about the process of creating a
balanced budget?
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Did knowing the dollar amounts involved the second time through make a difference in your choices?
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Did your perception of where money goes in the budget match reality?
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Look at the budget cuts or increases you made. How realistic would such changes be?
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This budget simulator allows you only to change spending and tax expenditures over a one-year period. What problems does this pose to finding a realistic economic solution for balancing the budget?
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Make
specific and detailed connections to course content.
By
the deadline shown in the Course Schedule on the main page of the
syllabus:
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Send
your summary containing the six items requested in the
body of a
new
email to
dramyglenn@earthlink.net.
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Put only your name and Activity #2 at the
beginning of your email.
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Be careful to use the correct subject line.
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Late summaries will lose one point per day late, including weekends and holidays.
READ THE FOLLOWING SECTIONS FROM THE MARGIN NOTES.
