May 2 launch convened a panel of education and economic policy experts, including Peter Orszag, Judith Johnson and Charles Calomiris, to discuss the curriculum, the current fiscal scenario, and the importance of educating young people on fiscal issues
NEW YORK (NY), May 2 – Teachers College, Columbia University, unveiled a new high school curriculum entitled “Understanding Fiscal Responsibility,” at an event this evening. The curriculum is the first of its kind, and is designed to educate young people on the federal budget and broader fiscal policy – issues that are critical to their future, yet, as Teachers College research shows, currently receive little attention in schools.
While the fiercely partisan debates about the federal budget national debt, and budget deficit continue to rage in Washington D.C., high school students across the country are preparing to take their turn at shouldering the high-stakes budget related challenges and persistently competing priorities we face as a nation and, by asking first, “Who are we as a nation? What do we value? What are our priorities and what are we willing to give up to ensure that we can dedicate our resources to those priorities?”
A group of leading policy analysts, economists and educators were on hand to discuss the fiscal challenges facing the country, and the importance of educating young people about the federal budget and fiscal policy. Panelists included Peter R. Orszag, vice chairman of Global Banking at Citigroup, Inc., former Director of the Congressional Budget Office, and former Director of the Office of Management and Budget in the Obama Administration; Judith Johnson, former Superintendent of Peekskill, N.Y. schools and former Acting Assistant Secretary for Elementary and Secondary Education at the U.S. Department of Education; and Charles Calomiris, the Henry Kaufman Professor of Financial Institutions at Columbia Business School.
Research by Teachers College, Columbia University, found that, although the federal budget is mentioned in the core curriculum adopted by most states, it gets little or no attention in most high schools across the country. The research was the impetus for the new curriculum. Developed by TC faculty and graduate students led by Anand R. Marri, Associate Professor of Social Studies and Education at Teachers College, the curriculum is designed for high schools but adaptable for middle schools and colleges.
“The curriculum is important because it raises questions for students not just about the mathematical details of the federal budget, but big questions about how the federal budget relates to our national priorities, and what it says about us as a nation,” Marri said. “Our goal is to have students understand the issues in all their complexities, be able to clarify their own thinking about these issues, and, ultimately, care enough to become involved in debating these and other public policy questions as citizens.”
The launch event was opened by Teachers College President Susan H. Fuhrman. She was followed by short remarks by Pete Peterson, Chairman of the Peter G. Peterson Foundation, which provided funding for the curriculum. The Peterson Foundation is a non-partisan organization dedicated to increasing awareness and accelerating action on America’s long-term fiscal challenges. The program also included the screening of a classroom video made at the Community School for Social Justice in the Bronx, where teachers have used the pilot UFR curriculum, as well as remarks by Marri and Kathryn Swallow, a mathematics teacher from the school.
Marri said the nonpartisan, research-based, and inquiry-driven curriculum engages students in the most important, complex public policy choices that confront the United States and its citizens. The curriculum invites participants from all points of view to ask important questions such as:
- What do the decisions we make about the federal budget, national debt, and budget deficit reveal about us as a people?
- How should we address our nation’s fiscal challenges now and in the future in a manner consistent with our values and traditions?
The multidisciplinary subject areas and individual lesson topics were chosen because each offers an important way of understanding these issues and because they align with what teachers are already teaching, Marri said. The collection of lessons addresses such dilemmas as:
- How should we make decisions about reducing or modifying spending on national security? Can we cut military spending and still meet our national security obligations?
- Should we raise income taxes to reduce the budget deficit and pay down the national debt?
- What costs and trade-offs are we willing to accept to ensure the benefits of income security to Social Security recipients?
- Is there a fair and efficient way to fund and maintain the public services we want?
“These are not easy or clear-cut questions,” Marri said. “But as students grapple with these public policy choices, they come to understand what more they need to know, and they acquire skills and learn concepts to deepen their understanding of the challenges.”
At the conclusion of the project, another research organization at Teachers College, Professor Thomas Hatch and Meesuk Ahn, Co-Director and researcher at the National Center for Restructuring Education, Schools and Teaching (NCREST) at Teachers College, will conduct an evaluation of the curriculum.
The first 10 of 24 lessons in the curriculum will be available in hard copy on May 2. Those 10 lessons, plus an additional five, also will be available for free download at www.understandingfiscalresponsibility.org. The remainder will be available online soon.
Also available online are supplementary materials, including a full glossary of both terms and concepts, and briefs on topics that include core economic concepts and the precepts of numeracy, as well as a blog for teachers that draws on the news of the day as it relates to the issues of the federal debt and deficit, and suggests how and where these topics may be used in the classroom. And, in the conviction that every student should have an opportunity to engage with these lessons, TC is mailing free copies of first 10 lessons to every high school in America.
CONTACT:
Patricia Lamiell
Director, Media Relations
Teachers College, Columbia University
525 W. 120th Street (between Broadway and Amsterdam)
New York, NY 10027
212-678-3979
937-449-7086
April 25, 2012
Teachers College, Columbia University
Understanding Fiscal Responsibility
Curriculum Launch Event
May 2, 2012
6:00 to 8:00 pm
Milbank Chapel
Program
Welcome
Anand Marri, Associate Professor of Social Studies, Teachers College
Introduction
Susan Fuhrman, President, Teachers College
Remarks
Peter G. Peterson, Chairman and Founder, The Peter G. Peterson Foundation
Video Presentation of the Curriculum
Anand Marri and Kathryn Swallow
Panel
A Conversation on Engaging Students in the Nation’s Fiscal Challenges
Moderator
Elizabeth Willen, Director, Hechinger Institute on Education and the Media
Panelists
Charles Calomiris, Henry Kaufman Professor of Financial Institutions,
Columbia Business School
Peter Orszag, Vice Chairman of Global Banking, Citigroup, Inc., and
Former Director, Office of Management and Budget
Judith Johnson, Retired Superintendent, Peekskill, NY, Public Schools
Audience Q&A
Reception
Everett Lounge
RSVP Today
April 24, 2012
The annual report on Social Security, published Monday, stated that the retirement program “is on track to go bankrupt three years earlier than expected if reforms are not made,” reports Rachel Younglai and Glenn Somerville for Reuters. The funding for Medicare similarly appears to be depleting quickly. Social Security, the report projected, would begin to run out of money for retirees’ pension checks in 2033, while Medicare would run out of funding entirely by 2024.
These projections relate closely to the fact that baby boomers, 78 million Americans born between 1946 and 1964, began retiring last year. As they continue to do so, the strain on both Social Security and Medicare will increase.
Younglai and Somerville quote two trustees of Social Security as warning lawmakers that they must act quickly in order to prevent the demise of the program. Because a large portion of the funding for Social Security comes from payroll taxes, a current suggestion for how to keep the program afloat is to raise payroll taxes. Right now, the payroll tax on employers and employees is 12.4 percent. The recommendation is to raise the percentage collected to 16.7. This 4.3 percent increase is estimated to cover the growing costs of Social Security so that the benefits will continue to be paid in full.
Congressmen also have considered raising the retirement age or cutting certain benefits to the wealthiest citizens. Because of the impending elections, however, it is unlikely that any decisions will be made regarding these issues, Younglai and Somerville report. The most urgent issue, trustees of the Social Security fund reported, was the disability insurance program, whose funding likely will be depleted by 2016.
In terms of Medicare, Republicans are pushing to overhaul the entire program, while Obama and the Democratic party claim that his new health care plan has added eight more years of life to its funding. Because both political parties strongly disagree on a solution, Younglai and Somerville explain again that it is unlikely for any changes to be made before the next election.
Bringing the Article into the Classroom
Teachers may begin by asking the students how the article relates the current U.S. economy to funding both Social Security and Medicare. Why does the state of this country’s economy influence the funding of these two federal programs? What other issues does the article point out as influencing the potential demise of Social Security and Medicare? The teacher may also ask students to come up with alternative federal budgets, tax plans, or even Medicare and Social Security distribution plans that take into account the depleting funds. Finally, the teacher may ask students how the issues raised about Medicare and Social Security relate to the federal budget and federal deficit.
April 18, 2012
Despite the fact that automatic cuts to the federal budget still are set to begin in January, House members continue to propose alternative plans. The most recent proposal comes from the Republicans: a call for $34 billion in cuts to the food stamp program over the next decade, reports Brian Faler in Businessweek.
This proposal comes as part of a larger plan to make $261 billion in spending cuts proposed last month by House Republicans. This proposal came with an order to a number of congressional committees to come up with spending cuts recommendations by April 27. This food-stamp cut is on proposal coming from that request.
According to Faler, the food-stamp program will cost about $80 billion this year. House Agriculture Committee Charman Frank Lucas is quoted as saying that this plan will make the food-stamp program more efficient: “It’s basically closing loopholes; it’s tightening things up; it’s reflecting the budgetary times we’re in.”
In response to this proposal, Democrats expressed outrage, Faler reports. Representative Peter Welch, a Vermont Democrat, explained: “We’re literally going to take it out of the mouths of babes.”
Representative Sander Levin, another Democrat, similarly scolded the Republicans for such a plan: “In their zeal to cut taxes for the very wealthy, House Republicans continue to put the burden on the backs of children, the elderly and the disabled.”
Retirement benefits also are a target for cuts in this Republican proposal, reports Faler, though he speculated that food stamp cuts would be “among the most contentious proposals.”
Bringing the Article into the Classroom
After reading this article in class, a few general questions to ask students are: does this article seem to present a bias? Is there a difference between biased reporting and reporting that focuses on a single group’s opinion?
More specifically, this article lends itself to a discussion on the different ways the government may or may not operate during an election year. In the article, Frank Lucas is quoted as saying that: “Everything that happens in an even-number year is always an election issue.” What do students make of this quote? Do they agree or disagree with him, and why? You may even give students an opportunity to speculate what the discussions surrounding the budget would be if it were not an election year. Another point of consideration is: is it possible to avoid turning every issue into an “election issue” in an even-number year?
April 13, 2012
The Buffett Rule has become a major talking point for politicians and economic specialists over the past few weeks. However complex the rule may be, Jeanne Sahadi for CNN Money provides a few basics on what you might want to know in her April 10th article. So what is the Buffet Rule exactly? The Buffett Rule, named after investor Warren Buffett, would ensure that millionaires and billionaires pay a higher percentage in their federal taxes. President Obama believes that the threshold should be no lower than 30%. According to the article:
To measure whether a millionaire is paying at least 30% of his income in taxes, the bill would take into account what the individual paid in federal income and payroll taxes plus the new 3.8% Medicare surtax set to take effect in 2013.
A big question about the Buffett Rule is how much money it would bring the federal government. From figures developed by the Joint Committee of Taxation, the rule would generate $47 billion over ten years. That said, Sahadi notes that many believe that it would complicate the tax code and do little to lower the deficit.
Teachers can use this article to further analyze the Buffett Rule with their students. Some questions to consider are: Should the threshold proposed by President Obama be more or less than 30%? Does cutting the deficit in such a small manner (billions instead of trillions) even matter? Teachers can also work on developing a tax code with their class that is more “fair” and “equal.” They should think about this in terms of the different people being taxed and what their possible reactions might be to paying varying percentages.
April 2, 2012
Which costs the federal government more: a $2,100 check from Uncle Sam or a tax break worth $2,100?
Jeanne Sahadi for CNN Money begins her article about the national government’s “hidden” spending by asking this question. In reality, $2,100 is the same cost for both, but the tax break does not count towards the federal budget. Fiscal experts are troubled by these tax breaks because they could end up causing the government to lose billions of dollars. The government, however, uses these breaks as ways to get certain goals accomplished without spending “physical” money. Sahadi provides two examples:
Congress wants to foster homeownership, so it lets homeowners deduct their mortgage interest. Lawmakers want to reduce greenhouse gas emissions, so they offer a tax credit to companies that produce biofuels such as ethanol or biodiesel.
If these tax breaks were considered government spending, a major topic of discussion for politicians and presidential candidates, then the government’s spending as GDP would be much higher. According to Sahadi, other unreported expenditures and fees help the government maintain a lower percentage of GDP spending. The article states that, “In all, if they were also recategorized in the budget, government spending in 2007 would have to be reported as 25.4% of GDP — or a nearly a third more than advertised.”
Reevaluating the tax code would allow policymakers to see how much the government actually spends. Donald Marron, director of the Tax Policy Center, asserts that limiting tax cuts would increase the revenue of the federal government, hopefully bringing in billions of dollars. Nonetheless, a debate on the tax breaks must occur because many passed breaks go unevaluated after their acceptance. Marron states, “hidden spending should get the same scrutiny — and inspire the same enthusiasm for cuts — as the spending on entitlements, domestic programs, and defense that is targeted by today’s fiscal hawks.”
Teachers can use this article to discuss tax breaks and the many different types that exist. Possible areas to investigate: environment, industry, real estate, nongovernmental organizations (NGOs), etc. A possible activity is to research the presidential candidates tax plans and see the different areas in which they propose tax breaks. Students could discuss whether or not these breaks would be popular if citizens had to pay for them outright.
March 28, 2012
A proposal closely resembling the Simpson-Bowles Plan from the 2010 deficit-reduction commission continues to move forward in Congress, reports Damian Paletta for the Wall Street Journal. Though many expect the plan to fail any vote in Congress, it signifies the possibility of new bipartisan effort.
Reps. Steve LaTourette (R., Ohio) and Jim Cooper (D., Tenn.), have sponsored the new bill that plans “to reduce the federal budget deficit by more than $4 trillion over 10 years through a combination of spending cuts and tax increases,” Paletta explains. This plan joins a number of budget proposals made in the past few weeks, though this one is the first with any bipartisan support.
This proposal cuts the deficit in a number of ways. First, it would lower tax rates while simultaneously eliminating or limiting tax breaks. These changes would account for almost $1 trillion in deficit reduction over 10 years. With regards to social insurance, the plan would set a limit on the long-term growth of federal health care spending, as well as make large changes to Social Security and other entitlement programs. The plan also would ask congressional panels to make cuts to federal programs that would amount to $300 billion.
Paletta reports that, thus far, at least three Republicans and four Democrats in the House support this plan. This bipartisan support is one instance of a new effort from both parties to negotiate the budget ahead of the November elections. Even so, both the White House and the Republican leadership have offered alternatives to this plan. The projections of the plans are given the graph below.
The Republican budget proposal, presented by Rep. Paul Ryan (R., Wis.) last week, restructures Medicare and Medicaid and does not include any tax increases. Mr. Ryan, commenting on both plans, said: “I applaud my colleagues for working in a bipartisan manner in an effort to address Washington’s fiscal crisis. Unfortunately, the proposal fails to confront the key driver of the debt: the explosive growth of government spending on health care.”
A White House official, in response to the Ryan Budget, said that it “protects massive tax cuts for millionaires and billionaires… [it was] understandable that some members of the Republican Party appear to want to take a more reasonable approach.”
Bringing the Article into Your Classroom
This article raises a number of interesting questions to discuss with your students: First, what do they think about the newest, bi-partisan budget proposal? Second, why do they think the Republican Party leadership will not support a plan proposed by House Republicans (with Democrats)? In the same vein, why has the White House given its own proposal, rather than supporting the Democrats who have helped create this plan? As students, do they support one plan over another? Why?
March 22, 2012
The Congressional Budget Office (CBO) recently received President Obama’s proposed budget for 2013. The President’s budget would add less to the national deficit than other plans, though it would still leave debt levels at the end of this decade near an alarming high. According to an article by Jeanne Sahadi for CNN Money, the CBO reported that Obama’s budget would add $6.4 trillion in deficits from 2013-2022 and bring public debt to 76% of GDP. Sahadi states that, “Debt held by the public includes U.S. bonds bought by investors, but excludes money owed to government trust funds, such as Social Security and Medicare.”
The CBO’s report shows that Obama’s proposal would stabilize the debt. This means the economy would grow faster than the deficit, possibly allowing for the deficit to have a less steep upward trajectory. If no debt-reduction plans are passed, however, the deficit will continue to rise. Based on historical trends, Sahadi believes that Obama’s budget proposal will have a hard time getting adopted in its entirety, especially during an election year. After the election, Congress must address some challenging issues, primarily the Bush-era tax cuts and whether or not to replace the $1 trillion in automatic cuts expected at the beginning of 2013.
Teachers can use this article to discuss the potential challenges facing budget negotiations. A key topic to present would be Gross Domestic Product (GDP) and the relationship it has with the national debt. Students can also work together to identify some of the national deficit issues Congress will face after the November election.
March 20, 2012
Though the budget is always a contentious issue, most members of Congress thought that it was last year’s issue. A number of Republicans want to renege on deal made months ago with Democrats, reports Steve Benen for Rachel Maddow’s MSNBC blog.
A number of conservative Republicans have expressed concern that government-spending levels still are too high despite last year’s extensive debt-limit debate. A few weeks ago, Majority Leader Eric Cantor (R-Va.) met with a number of Republicans who no longer support the August agreement and urged them to reconsider their position.
Benen reports that meeting did not come to any resolution, and that the group plans to “submit a budget resolution with spending levels below the agreed-upon levels.” Benen goes on to say that despite the fact that Democrats will reject this alternative plan, the GOP still plans to pick a fight.
A possible government shutdown is imminent, warns Benen. When the Congressional Budget Office provides with Budget Committee with estimates for the upcoming year (expected for next week), the Committee will consider how to proceed. Those numbers will help the Budget Committee determine how to approach both parties.
Many congressmen have expressed frustration that GOP members are considering ignoring their party’s leadership. As such, Benen quotes Sen. Patty Murray (D-Wash.):
If House Republicans walk away from the agreement their own Speaker made less than a year ago, then they will show that a deal with them isn’t worth the paper it’s printed on…Republicans are playing with fire here, and I urge them to not cave to their most conservative members and to stick to the budget levels we already agreed to last year.
In the Classroom
This article lends itself to a discussion on bipartisanship in Congress. The teacher may want to structure the lesson around an examination of the Democratic Party’s ideology for government spending and taxation in comparison to that of the Republican Party. Is there any area of the budget on which the two parties agree?
The teacher also could create a structured debate in which the students are asked to create and then compromise on a budget. First, students should be given a chart of the general sections of the budget. Then, the students should be split into Republicans and Democrats and then asked to spend some time creating a budget according to their party’s ideology. Have each group present their budget to the other and then examine the differences. Finally, ask students to attempt a compromise without straying too far from their party line. Whether or not they reach a compromise, the struggle within the discussion to reach that point should demonstrate to students why bipartisanship is never simple and why it may isolate the extreme members of either party.
March 2, 2012
Will the government need to provide another stimulus package? According to an article by Pedro Nicolaci da Costa for Reuters, Federal Reserve Chairman Ben Bernanke alluded to a need for more federal money to help stimulate the economy. Although the economy shows slight signs of improving, Bernanke warned that this growth and the drop in unemployment seems odd. From the article:
“There’s still a bit of a contradiction between the improvement in the labor market and the speed of the overall recovery,” Bernanke said in a second day of testimony to Congress. “You’ve still got consumption spending growing relatively weakly.”
Bernanke told Congress that it must develop a long-term plan to help with the federal deficit America currently faces. However, da Costa states that Bernanke also believes that a constricting of the fiscal agenda for 2013 could “derail the recovery.” Bernanke answered the claim that the American economy had been permanently damaged and would have to adjust interest rates accordingly. Bernanke stated that, “We do not see at this point that the very severe recession has permanently affected the growth potential of the U.S. economy.” He does believe, however, that unemployment rates have the potential to hurt the economy in the long-term. From the article: “Although we haven’t seen much sign of it yet, if that situation persists for much longer, then that will reduce the human capital that is part of our growth process going forward.”
Teachers can use this article to learn about the Federal Reserve and the individuals that comprise the organization. Prior to reading this article, students can visit the Federal Reserve website and learn about the Fed’s impact on the United States’ economy. Other helpful information would be to cover terms like inflation and deflation, found within the original article and commonly associated with economic policies. Teachers could also have a roundtable discussion with their students over the pros/cons of an economic stimulus that Bernanke hints at. Possible debate topics include: How much should the stimulus cost? What are some positives? Negatives? How will it be funded? What might a stimulus do for America’s economy short-term? Long-term? What will this do to the federal deficit?
February 28, 2012
The supercommittee may be gone, but it certainly has not been forgotten. House Minority Whip Steny Hoyer of Maryland made that point clear in his address on Capital Hill on Tuesday, reports John R. Parkinson and Carson McKinlay for ABC News. Hoyer stated that Congress should replace the automatic spending cuts set for the end of the year with a plan similar to the one proposed by President Obama and House Speaker John Boehner last summer (which failed in negotiations).
Hoyer explained that he believed the deficit posed a tremendous danger for this country, but that the current plan did not adequately address the country’s economic needs. Referring to the automatic cuts, he explained:
Simply walking away from sequestration would be waving the white flag in the face of [the Congressional Budget Office’s] projection of a dismal fiscal future. However, sequestration remains an irrational response. It was the blunt instrument established to force both sides to the table to keep them there… It [the automatic spending cuts] should be replaced, but replaced only by the kind of big, balanced solution the Joint Select Committee [A.K.A. the supercommittee] was supposed to have produced.
In his speech, Hoyer went on to assert that the automatic cuts were never meant to happen. The plan simply existed in order to force both sides to begin negotiations. The additional fact that the cuts are not scheduled to begin until the end of the year also indicated that there still is time to agree on a new deal. He explained that there must be a compromise between an increase in the amount of money the government collects (through taxes) and cuts in spending.
In Your Classroom
This article gives one Congressman’s opinion for what should happen next in the plans to cut the deficit. Hoyer, as a Democrat, represents the party line, which is explored further in this article. You may want to use the information provided in this article to create a graphic organizer with your students that examines the different stances Republicans and Democrats take on the appropriate action for Congress to cut the deficit.
Alternatively, you may use this article as a jumping-off point for a web-quest which would explore what Republican Congressmen are saying about the deficit reduction plan. You may ask your students to see if there are: direct responses to Hoyer, similar statements made by Republican Congressmen unrelated to Hoyer’s response, and other Democratic statements.
In a discussion on this article, you may want to ask the following questions: Why has Hoyer chosen this point in time to make an address about the deficit? Why might he think that asking Congress to pass a plan that failed in negotiations over the summer would be reconsidered (and passed) now?
February 24, 2012
According to a CNN article by Tom Cohen, Obama signed a law on Wednesday that would extend the payroll tax cut, unemployment benefits, and prevent cuts in payments to Medicare doctors. With Obama’s signing, these topics are now sorted out for the remainder of the year. President Obama and his administration also released a plan that would lower the corporate tax rate as well as reduce the number of tax breaks businesses can receive. His plan lowers the corporate tax rate from 35% to 28% and outlines a proposal that would follow the “Buffet Rule,” a rule that would tax people that make an annual income of over $1 million to pay at least a 30% tax rate. Political strategists view Obama’s tax plan as a means to distinguish himself from the Republican nominee and as the groundwork for a campaign against a “do-nothing” Congress.
The extension of the payroll tax cut lowers the percentage workers pay into Social Security and also plays a key role in Obama’s economic recovery plan. From the article:
The roughly $100 billion measure, a key part of Obama’s economic recovery plan, has reduced how much 160 million American workers pay into Social Security on their first $110,100 in wages. Instead of paying 6.2% had it lapsed, they’ll be paying 4.2%, a break worth about $83 a month for someone making $50,000 a year.
Teachers can use this article and past blogs to discuss how the tax rate will influence the reduction of the federal deficit and the possible implications it could have on funding federal programs. A class debate would be an excellent idea for students to deliberate on the corporate tax rate and the positive/negatives for Obama’s lowering of it. Students could then write a short paper/essay with their opinion and use evidence from the debate to support their claim.
February 23, 2012
In less than one year, this country will vote to elect a new President. As the Republican candidates spar in frequent debates, campaign advertisements, and other modes of publicity (as well as through the formal primary elections), Obama’s campaign team also has entered the public eye. Rather than differentiating Obama from the Republican candidates through his stance on social issues, the Obama campaign has decided to look at which candidate would cut the deficit the most, reported Devin Dwyer for ABC News.
The Obama campaign recently released a memo that analyzed the budget proposals of Mitt Romney and Rick Santorum, the two frontrunners in the Republican primaries. Dwyer reports:
Obama aides, citing studies from the Tax Policy Center and Center on Budget and Policy Priorities, conclude Romney’s public budget proposals would add $175 billion a year to the deficit. They claim his proposed tax cuts and increased defense spending would not be adequately offset by as yet unspecified spending cutes the size of which are deemed ‘simply not plausible.’ The memo also claims Santorum’s plan would add $990 billion to the deficit in 2015.
In contrast to this memo’s conclusions, both Romney and Santorum have stated that they planned to cut government spending as President. In an email to ABC News, Dwyer reports, Romney campaign spokeswoman Andrea Saul “did not directly refute” this memo’s analysis. Rather, she highlighted the fact that, during the Obama presidency, the deficit has grown by over $5 trillion.
Bringing This Article into the Classroom
Dwyer’s article points to the fact that Obama’s campaign has decided to attack both Romney and Santorum for their proposed budgets and their effect on the federal deficit. In a class discussion, you may ask your students why they think the Obama campaign is choosing to focus on the federal deficit as a campaign strategy rather than simply focusing on social issues?
This article also lends itself to a discussion on the different approaches Republicans and Democrats take to taxing and spending. By examining the general philosophical differences of small vs. big governments, students will have a greater appreciation for why the Obama campaign sees their memo as an effective attack on the Romney and Santorum campaigns.
February 17, 2012
The Republicans and Democrats reached an agreement this week, but, according to Stephen Dinan in The Washington Times, only Obama was “taking a victory lap.” The two parties agreed and passed a payroll tax cut which will result in a $100 billion increase in the federal deficit.
The positive fact that the two parties agreed seemed to outweigh the negative result of the increasing deficit. Dinan quotes both a Republican and a Democrat complaining about the result:
“’Why is it that the only time we can come together and reach an agreement, it’s in a manner that increases the deficit or explodes spending?’ Said Rep. Jeff Flake, Arizona Republican. ‘That’s enough to make the country cry for more partisanship.’
“Senator Mark Warner, Virginia Democrat, said lawmakers reminded him of Wimpy, the character from Popeye who was always trying to mooch off of others, with his catch-phrase ‘I’ll gladly pay you Tuesday for a hamburger today.’ ‘Wimpy once again has won out,’ Mr. Warner said on the Senate floor Thursday…”
The exact terms of the deal are as follows: “A 2 percentage point payroll tax holiday would be extended through the end of this year, as would enhanced unemployment benefits and full reimbursement levels for doctors who treat Medicare patients.” According to the Congressional Budget Office’s projections, this deal will add $101.1 billion to the 2012 deficit and $40.2 billion to the deficit for the following year. Taking into account future spending cuts and higher fees, the 10-year net deficit is projected to be $89.3 billion.
Bringing the Article Into Your Classroom
This article focuses primarily on the consequences of compromise: when two opposing sides want to make an agreement, both need to make concessions. When one party wants to cut taxes, and another party wants the government to spend more, the net result is a larger bill for the government to pay.
In order to discuss this idea in the classroom, it may be useful to set up a role-play in which the students must negotiate the school budget. Split the class into two teams and give each time a list of priorities (one team wants better cafeteria food, one team wants new computers, etc.). Have the students consider what aspects of the budget they would be willing to concede and which demands they will not back down from. Create a structure in which they could debate the budget and then reflect upon the process of negotiation.
Alternatively, this article lends itself to considering what the two political parties in Congress considers its policy priorities. You may ask students to consider what the seeming differences are between Republicans and Democrats based on this article, and the ways in which both parties seem to consider and not consider the near and distant future.
February 13, 2012
President Obama sent his budget proposal for 2013 to Congress today. According to Chris Moody’s Yahoo News article, in the outlined plan, Obama expresses the need to raise tax rates on the wealthy, increase funds for job training and infrastructure, and cut unnecessary spending on government programs. If approved, the federal deficit could decrease by $4 trillion over the next ten years, yet leave the federal government with a $901 billion shortfall at the conclusion of 2013.
The passing of the Budget Control Act last August, which eliminated discretionary spending by $900 billion over the next ten years, caused President Obama and the White House to make cuts to programs like Medicare and Medicaid. Moody states that the plan reduces the amount of funding for the aforementioned programs by $360 billion. Republicans have expressed their disapproval of the proposed budget because they believe it does not do enough to lower the federal deficit and does not justify the need to raise taxes. The Republicans, according to Moody, “also knocked Obama for submitting a budget that does not cut the federal deficit in half by the end of the president’s first term, a promise Obama made in February 2009.”
Republican presidential candidates Mitt Romney and Ron Paul both criticized Obama’s proposal. From the article:
“The President has failed to offer a single serious idea to save Social Security and is the only president in modern history to cut Medicare benefits for seniors,” Romney said in a statement in which his campaign also referred to the budget as “an insult to the American taxpayer.”
“I believe we can save Social Security and Medicare with a few commonsense reforms, and,” Romney added, “unlike President Obama — I’m not afraid to put them on the table.”
“When President Obama talks about spending ‘cuts’ it’s always some plan that will supposedly unfold over a decade and that the next president or Congress can change at whim,” Paul’s campaign said in a statement on its website. “In other words, cuts never happen. But budget deficits, as evidenced above, happen every year. And they will continue to happen every year. President Paul would offer $1 trillion cuts in the first year.”
Teachers could use this article as a class warm-up or “Do Now” to talk about the federal budget. Teachers could then use the provided link to read President Obama’s remarks on the budget and how he presented them to the American public. The White House blog has the digital edition of the budget at the bottom of the webpage (257 pg. document). Students could evaluate some of President Obama’s proposals and address these questions: What might be some issues of debate between Republicans and Democrats? What proposals will need modification for support from both sides? How does the proposal further address the federal deficit? How might the budget influence domestic policies like Social Security, Medicare, and national security? Upon discussing these questions, students should have a stronger understanding of how the federal budget impacts the federal deficit and the types of discussions that occur between the two major political parties involving the appropriation of governmental funding and taxation.
February 8, 2012
Ben Bernanke, the Federal Reserve Chairman, expressed concern to legislators over the spending cuts and tax increases scheduled for 2013, reports Suzy Khimm for the Washington Post. In his testimony on Tuesday, Bernanke discussed the current economic climate and gave his projections for the coming year. He noted that, while the country’s economy has recovered more slowly than everyone had hoped, he remained optimistic for the coming year.
Forecasts given for 2012’s unemployment rate predicted a number far higher than what has proven to be true thus far. According to the most recent jobs report, the United States added 243,000 jobs in January. These additions brought down the unemployment rate to 8.3%. Bernanke attributed this decrease, at least in part, to the recent revival of manufacturing in this country: “US manufacturers have become increasingly competitive on a global stage.”
Despite his lauding American manufacturers, Bernanke’s overall message was grim: he believed that the 2013 drastic fiscal changes (the expiration of the Bush tax cuts and the spending reductions triggered by the Budget Control Act) would slow economic recovery further. Senator Pete Sessions (R-Ala.), questioned Bernanke and his claim that it was less important to reduce the deficit than to continue to encourage recovery and growth. Bernanke’s response was simple: “What we want to do is have a credible, strong plan so that the economy doesn’t hit a huge pothole.” Bernanke thus encouraged a deficit reduction plan that could phase in over a longer period of time than the automatic one set for January 2013.
In the Classroom
This article may be used in a variety of ways. It may be introduced simply as a way to keep students apprised of the opinions being heard by Congress about the budget deficit. It may also be used to introduce Ben Bernanke and the Federal Reserve, if you have not done so previously.
The article also may be used in a debate on the merits of the current plan for deficit reduction. Bernanke provides an argument against the plan – he says that it occurs in too short a time and will slow overall economic recovery. What do your students think? Which topic is more important: economic recovery or deficit reduction? Is it possible to have one without the other?
February 3, 2012
Will the federal budget deficit shrink? This question remains a topic of discussion in Robert Pear’s article for The New York Times. According to Pears, the Congressional Budget Office reported that the budget of 2012 would be lower than the 2011 budget by $200 billion, yet it will still be over $1.1 trillion. Although this drop will help prevent the federal deficit from rising even more, the predicted unemployment numbers show signs of increasing from 8.5% to 8.9% at the end of 2012, and possibly 9.2% in the first quarter of 2013. Some politicians fear that the combination of high taxes and lack of government spending will hinder economic growth and thus job creation. However, Douglas Elmendorf, director of the Congressional Budget Office, said spending cuts “would markedly slow the economic recovery” but could improve the economy’s strength in the long run.
Both parties have expressed their viewpoints on this report. From the article:
The report provided grist for both parties. Republicans said it showed that President Obama’s policies were not working, as evidenced by the high deficit, the rapidly increasing debt and continued high unemployment.
However, Democrats said the report confirmed their argument that new revenue, as well as spending cuts, would be needed to solve the nation’s fiscal problems, and that a stronger economy was the best way to reduce the deficit.
As stated in previous blogs and presented in the report, the expiration of the Bush era tax cuts at the end of this year will automatically reduce the deficit by billions of dollars in the coming years. Pears also notes that extending the Bush tax cuts while reversing other budget-balancing policies could still cause the deficit to drop below $1 trillion and decline as a share of the economy.
Pears states that budget office believes this year’s debt will amount to 7% of U.S. economy, lower than last year’s percentage, but “still higher than any deficit between 1947 and 2008.” The government will need to borrow in order to fill the gap between revenues and spending, causing the total federal deficit to “rise to $21.6 trillion in 2022, from the current level of $15.2 trillion.”
Teachers could use this article to discuss the competing interests involved in making a federal budget. Although the federal government is working to reduce spending, it also must address the issue of unemployment and continue to provide services to citizens. Some questions to consider: Should the federal government spend more to keep programs running or focus solely on reducing the deficit? How do we balance the economic needs of the present with the long-term benefits of social programs and government services? Whose responsibility is it to pay for these services? By addressing these questions, students should begin to see the challenges of balancing the federal budget.
February 1, 2012
Paul Krugman, a 2008 Nobel Prize winner in Economics, wants you to stop comparing the federal debt to the debt of an individual. In a recent New York Times op-ed piece, Krugman reframes this issue to explain why he believes that the federal debt is not the most urgent issue this government faces.
Krugman begins by pointing out that, despite the fact that the unemployment rate has been “disastrously high” the past two years, Congress has focused its energy on reducing the budget deficit. Krugman lambasts both Congress and the economists with whom Congress has been consulting:
When people in D.C. talk about deficits and debt, by and large they have no idea what they’re talking about – and the people who talk the most understand the least. Perhaps most obviously, the economic ‘experts’ on whom much of Congress relies have been repeatedly, utterly wrong about the short-run effects of budget deficits.
Krugman goes on to point out what specifically these economists have gotten wrong: in the short term, they claimed that the budget deficit would lead to increasing interest rates, though interest rates actually have dropped over the course of Obama’s presidency.
In the long term, Krugman claims, governments do not have to pay back their debt in the way individuals must pay back personal debts. He explains: “An over-borrowed family owes money to someone else; U.S. debt is, to a large extent, money we owe to ourselves.” As discussed in earlier posts, the federal government borrows money by issuing bonds. Though foreigners own many of these bonds, for each dollar of American debt claimed by foreigners, Americans have 89 cents worth of claims on foreigners. In addition, American investments in foreign assets are more risky than foreign investments in the U.S. – which means that Americans earn more from their assets than foreigners do.
Krugman eventually does concede that debt is a problem without modest increases in taxes – and that raising taxes does have a cost. He concludes by saying that the government may only continue to maintain a high debt if it also raises taxes. Since this government is so anti-tax, however, it is unlikely that taxes will be rising anytime soon.
In order to introduce this article into the classroom, you may first want to introduce Krugman with a brief biography to contextualize his claims. You may then ask the following discussion questions: What economic principles does Krugman introduce in this article (for example, do collecting taxes lead to more or less productivity)? What are alternative opinions to what Krugman claims? Because Krugman makes many bold statements in his article, what alternative opinions have been discussed in this class in the past? What opinion/idea about the value of having a budget deficit makes more sense to you?
January 25, 2012
On Tuesday night, President Obama addressed Congress in the annual State of the Union speech. The transcript of his speech may be found here. In just under an hour, Obama called attention to his accomplishments, described his plans for the future, asked Congress to try to overcome partisan difference to get things done, and invoked the American Dream as the ideal to which our country is striving.
During the speech, Obama only mentioned the federal deficit twice. The first mention was buried within the first ten minutes. He declared: “American manufacturers are hiring again, creating jobs for the first time since the late 1990s. Together, we’ve agreed to cut the deficit by more than $2 trillion. And we’ve put in place new rules to hold Wall Street accountable, so a crisis like this never happens again.” In this mention, the agreement to cut the deficit seems to be just another of his many accomplishments. It merely is part of a list, sandwiched between job creation and new regulations for Wall Street.
The second mention is much more informative and complete. He explains:
“When it comes to the deficit, we’ve already agreed to more than $2 trillion in cuts and savings. But we need to do more, and that means making choices. Right now, we’re poised to spend nearly $1 trillion more on what was supposed to be a temporary tax break for the wealthiest 2 percent of Americans. Right now, because of loopholes and shelters in the tax code, a quarter of all millionaires pay lower tax rates than millions of middle-class households…As I told the Speaker this summer, I’m prepared to make more reforms that reign in long-term costs of Medicare and Medicaid, and strengthen Social Security, so long as those programs remain a guarantee of security for seniors. But in return, we need to change our tax code so that people like me, and an awful lot of members of Congress, pay our fair share of taxes.”
According to Obama, the key to lowering the deficit is twofold: the government needs to act more frugally and reform policies that are expensive, and it needs change the tax code so that wealthier citizens pay more.
If your students were not required to watch the State of the Union, you could assign students to read parts of the speech or articles describing the speech. Due to the fact that the State of the Union may be found on so many different media, you may assign students to pick one medium to watch/read/listen to the speech.
You may begin a discussion on Obama’s speech by asking: how did Obama first bring up the government debt? Why does he mention it within the context in which he does? When else does Obama address the federal deficit, and what does he propose to address the deficit? Why did Obama only dedicate two sentences to addressing an agreement made by Congress that took months to decide? What do you, as students, think about his proposals? What are alternatives to what he proposed?
Because Congress currently has a Republican majority, many critics claim that Obama will not be able to get any of his proposals done during his last year of this term. Others say that this State of the Union was the Obama’s response to the Republican primary candidates’ criticism. What do your students think about these two criticisms?
January 23, 2011
Will the federal deficit increase even more in 2012? This question remains a topic of debate for many politicians in Washington this month as President Obama announced the need to raise the debt ceiling by another $1.2 trillion. According to a January 12, 2012, article by David Lawder for Reuters, President Obama sent a message to John Boehner (R-Ohio), the House of Representatives Speaker, stating that more money would be needed to “meet existing commitments.” If this proposal passes, then the total nation debt would surpass the $16 trillion mark.
As stated in the article, there is very little time for lawmakers to vote against Obama’s proposition, thus preventing a similar crisis that nearly brought Congress to default in the summer of 2011. However, many Republicans see this proposal as a chance to present Obama as an economic squanderer and hopefully dampen his chances of obtaining a second term in office. From the article:
“The President’s runaway borrowing threatens the foundation of our economy and the financial future of every hardworking American,” said Senator Jeff Sessions, the top Republican on the Senate Budget Committee.
The debt limit increase by President Obama was originally planned to occur in December, yet officials asked him to wait until Congress came back into session in 2012. To continue funding the “existing commitments,” the Treasury Department has had to pull money out of Exchange Stabilization Fund and might have to take other measures until the new debt ceiling is established. Lawder also states that the debt limit has “increased by $900 billion since last summer’s debt brawl to $15.194 trillion.”
Teachers could use this article to discuss with students the need to increase the federal deficit ceiling. Some questions to consider: What are the “existing commitments” President Obama speaks about? What federal programs might experience cuts for this debt increase? What programs might receive more funding? How does this increase impact the local and state levels of government? To what extent does this debt increase influence American foreign trade and humanitarian policies? Students should look at President Obama’s proposal from a variety of perspectives in order to better comprehend how the raising of the debt ceiling impacts local, state, national, and international spheres.
Students could also see how President Obama presents this topic during his State of the Union on January 24, 2012. How might he put forth this idea to the American people? What do political commentators say about it after the address? Listening to a range of viewpoints should allow students to see how complex the issue of increasing the national debt is to media and political outlets.
