The President’s Dilemma:
5-Year Fiscal & Monetary Policy Plan
for the U.S. Economy
Group Members:
_________________________________________________
_________________________________________________
_________________________________________________
_________________________________________________
__________________________________________________
YEAR 1--2015
Increases in Tax Revenue/
Cuts in Government Spending
FISCAL POLICY RECOMMENDATIONS
How many
Reductions of Tax Revenue/
billions of
Increases in Government Spending
dollars?
Example: Cut in Social Security Budget
$70 billion
TOTAL INCREASES IN TAX REVENUE AND
CUTS IN GOVERNMENT SPENDING
(DECREASES DEFICIT)
Ex: Cut in Corporate Income Taxes
How many
billions of
dollars?
$50 billion
TOTAL LOSSES OF TAX REVENUE AND ADDITIONAL
GOVERNMENT SPENDING (INCREASES DEFICIT)
MONETARY POLICY RECOMMENDATIONS
The Fed should (circle one)
RAISE
The Fed should (circle one)
BUY
(circle one)
RAISE
LOWER
TAKE NO ACTION ON
SELL
TAKE NO ACTION ON
LOWER
MAKE NO CHANGE TO
PROJECTED DEFICIT FOR THE YEAR 2014:
CURRENT OVERALL DEBT:
the Discount Rate so that it is at _________% by the end of 2015.
U.S. Treasuries to
the Federal Funds Rate so that it is at _________% by the end of 2015.
$630 Billion ($3 Trillion in Tax Revenue MINUS $3.63 Trillion in Spending)
$17.5 Trillion
PROJECTED DEFICIT FOR THE YEAR 2015 (Remember you start with a deficit of $630 Billion)
___________________________
PROJECTED OVERALL DEBT BY THE END OF 2015 (any deficit for the year must be added to the debt—if you have generated a surplus for the
year that would be subtracted from the debt)
___________________________
YEAR 2—2016
Increases in Tax Revenue/
Cuts in Government Spending
FISCAL POLICY RECOMMENDATIONS
How many
Reductions of Tax Revenue/
billions of
Increases in Government Spending
dollars?
Example: Cut in Social Security Budget
$70 billion
TOTAL INCREASES IN TAX REVENUE AND
CUTS IN GOVERNMENT SPENDING
(DECREASES DEFICIT)
Ex: Cut in Corporate Income Taxes
TOTAL LOSSES OF TAX REVENUE AND ADDITIONAL
GOVERNMENT SPENDING (INCREASES DEFICIT)
MONETARY POLICY RECOMMENDATIONS
The Fed should (circle one)
RAISE
The Fed should (circle one)
BUY
(circle one)
RAISE
LOWER
TAKE NO ACTION ON
SELL
TAKE NO ACTION ON
LOWER
MAKE NO CHANGE TO
PROJECTED DEFICIT FOR THE YEAR 2016:
the Discount Rate so that it is at _________% by the end of 2016.
U.S. Treasuries to
the Federal Funds Rate so that it is at _________% by the end of 2016.
_________________________________
PROJECTED OVERALL DEBT BY THE END OF 2016: _________________________________
How many
billions of
dollars?
$50 billion
YEAR 3--2017
Increases in Tax Revenue/
Cuts in Government Spending
FISCAL POLICY RECOMMENDATIONS
How many
Reductions of Tax Revenue/
billions of
Increases in Government Spending
dollars?
Example: Cut in Social Security Budget
$70 billion
TOTAL INCREASES IN TAX REVENUE AND
CUTS IN GOVERNMENT SPENDING
(DECREASES DEFICIT)
Ex: Cut in Corporate Income Taxes
TOTAL LOSSES OF TAX REVENUE AND ADDITIONAL
GOVERNMENT SPENDING (INCREASES DEFICIT)
MONETARY POLICY RECOMMENDATIONS
The Fed should (circle one)
RAISE
The Fed should (circle one)
BUY
(circle one)
RAISE
LOWER
TAKE NO ACTION ON
SELL
TAKE NO ACTION ON
LOWER
MAKE NO CHANGE TO
PROJECTED DEFICIT FOR THE YEAR 2017:
the Discount Rate so that it is at _________% by the end of 2017.
U.S. Treasuries to
the Federal Funds Rate so that it is at _________% by the end of 2017.
_________________________________
PROJECTED OVERALL DEBT BY THE END OF 2017: _________________________________
How many
billions of
dollars?
$50 billion
YEAR 4--2018
Increases in Tax Revenue/
Cuts in Government Spending
FISCAL POLICY RECOMMENDATIONS
How many
Reductions of Tax Revenue/
billions of
Increases in Government Spending
dollars?
Example: Cut in Social Security Budget
$70 billion
TOTAL INCREASES IN TAX REVENUE AND
CUTS IN GOVERNMENT SPENDING
(DECREASES DEFICIT)
Ex: Cut in Corporate Income Taxes
TOTAL LOSSES OF TAX REVENUE AND ADDITIONAL
GOVERNMENT SPENDING (INCREASES DEFICIT)
MONETARY POLICY RECOMMENDATIONS
The Fed should (circle one)
RAISE
The Fed should (circle one)
BUY
(circle one)
RAISE
LOWER
TAKE NO ACTION ON
the Discount Rate so that it is at _________% by the end of 2018.
SELL
TAKE NO ACTION ON
U.S. Treasuries to
LOWER
MAKE NO CHANGE TO
PROJECTED DEFICIT FOR THE YEAR 2018:
the Federal Funds Rate so that it is at _________% by the end of 2018.
_________________________________
PROJECTED OVERALL DEBT BY THE END OF 2018: _________________________________
How many
billions of
dollars?
$50 billion
YEAR 5--2019
Increases in Tax Revenue/
Cuts in Government Spending
FISCAL POLICY RECOMMENDATIONS
How many
Reductions of Tax Revenue/
billions of
Increases in Government Spending
dollars?
Example: Cut in Social Security Budget
$70 billion
TOTAL INCREASES IN TAX REVENUE AND
CUTS IN GOVERNMENT SPENDING
(DECREASES DEFICIT)
Ex: Cut in Corporate Income Taxes
TOTAL LOSSES OF TAX REVENUE AND ADDITIONAL
GOVERNMENT SPENDING (INCREASES DEFICIT)
MONETARY POLICY RECOMMENDATIONS
The Fed should (circle one)
RAISE
The Fed should (circle one)
BUY
(circle one)
RAISE
LOWER
TAKE NO ACTION ON
SELL
TAKE NO ACTION ON
LOWER
MAKE NO CHANGE TO
PROJECTED DEFICIT FOR THE YEAR 2019:
the Discount Rate so that it is at _________% by the end of 2019.
U.S. Treasuries to
the Federal Funds Rate so that it is at _________% by the end of 2019.
_________________________________
PROJECTED OVERALL DEBT BY THE END OF 2019: _________________________________
How many
billions of
dollars?
$50 billion