U.S. Budget Deficit

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U.S. Budget Deficit
The United States has for a long time been subject to international security concerns. As explained by Elmendorf, the U.S. economic recovery has been weak since the end of the global economic recession period that lasted between 2007 and 2009 (2). Because of reduced revenues and increased spending, the U.S. fell into a deficit of nearly 439 billion in 2015. An earlier report by Congressional Budget Office estimated the deficit at 435 Billion U.S. Dollars with 3.25 trillion in revenue and 3.69 trillion in expenses. Although the budget picture of the U.S. has altered considerably since 2009, with deficits decreasing by almost 70 percent, debt values have been high throughout the years. The president, therefore, needs to formulate specific strategies to slash the budget deficit to 1100 billion U.S. Dollars and restore economic normalcy.
Increasing tax revenues and reducing government spending are the two ways the U.S. president can cut the budget deficit to 1100 billion U.S. Dollars. However, these strategies may slow down economic growth and throw the country into a fiscal cliff if not implemented wisely (Elmendorf 16). Therefore, the president may institute a balance of spending cuts and new revenues by extending all tax cuts and incentives except for the rich, fixing alternative minimum cap and tax deductions for wealthy people and capping federal spending on health-care. The president may also raise the age for retirement, and use means testing for Medicare and social security, replace quester cuts on spending with other viable reforms and abolish the statute that makes it a prerequisite for the Congress to approve debt-ceiling increases.

The above strategies fall into two categories- raising federal revenues by increasing taxes on wealthy people and reducing federal spending, especially on benefit programs. These strategies can be classified as contractionary fiscal policies. The wealthy tend to save more as compared to the poor (Elmendorf 32). Therefore, increasing taxation on the rich will not have adverse impacts on investment as compared to the poor. Also, reducing government spending will enable the government to reduce its annual borrowing and total public sector debt without harming economic growth. As such, the president will be able to cut the budget deficit by 1100 U.S. Dollars and maintain economic growth at manageable levels.

Work Cited
Elmendorf, Douglas W. “Choices for Deficit Reduction: An Update.” Congress of the United States Congressional Budget Office, December. 2013: 1-35.