Deficit Reduction

The purpose of this research is to examine the programs necessary to reduce the federal deficit and move towards a balanced budget. Emphasis will be given to examining the types of spending cuts available to the federal government for reducing the deficit. The relative contribution of these spending cuts toward balancing the federal budget will be also be assessed.

The national debt is as old as the nation itself. Alexander Hamilton, the first Treasury Secretary under the George Washington Administration, was the first time the United States government borrowed money to finance government programs and capital construction projects. The nation has been in debt ever since. But the proportions of this national debt have only become staggering since the Reagan Administration of the 1980s.

From 1946 to 1970, the debt grew from $271 billion to $381 billion, a yearly average deficit of less than $5 billion. (The federal deficit is one year's increase in the debt. The federal debt is the sum of all past yearly defic

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there is less agreement on exactly which federal services to eliminate or reduce. In deciding what to cut from discretionary spending, U.S. Senator Pete Domenici has proposed three helpful criteria. When reviewing the federal government, three questions should be asked. If the program did not already exist, would Congress fund it and would the public support it? Is the program or activity a federal responsibility or could it be carried out in the private sector? And is the program a luxury item, something the nation may have been able to afford in better times but cannot afford any longer? Several discretionary programs that exist today would not muster support if presented to Congress as new programs. Subsidies to encourage production of wool is one case in point. Wool was desperately needed for the war effort in the 1940s but no longer is all that valuable. yet, taxpayers subsidize wool production to the tune of $180 million a year. Other Cold War programs of dubious purpose today include the U.S. Information Agency and the Voice of America. Several other federal programs could easily be assumed by the private sector and performed just as efficiently, if not more so, than done by the federal bureaucracy. Foremost of t
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Approximate Word count = 1765
Approximate Pages = 7 (250 words per page)

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