Tuesday, October 15, 2013

Do You Think You Can Balance the Budget?

I have decided to share the Budget Simulation that I developed for my Pubic Policy class. I first created the simulation in 2007 to help students understand the various areas of the federal budget and the difficult choices involved in cutting programs or increasing taxes. Over the years I expanded and improved the simulation. It's very easy to use if you follow the directions. Your task is to get the deficit under control. The simulation contains actual budget data for FY 2013. Spending is organized by budget function and subfunction. If you place your mouse over any of the function or subfunction boxes a pop-up box will provide a description of the programs covered. You are free to increase or decrease spending. I have excluded Medicare and Social Security from simple percentage increases or decreases and instead provided specific reform options for you to review later in the simulation.

At the end of the spending changes you will find a tally box that reveals... your changes in spending and resultant changes in your deficit. The original values for each are also presented.

In the next section you are given the opportunity to change revenue by make changes to tax policy. You cannot propose specific tax rates, but what you can do is propose increases or decreases to the tax burden of different income groups - from the bottom 50% to the top 1%. The simulation shows how much income tax revenue is currently collected from each. If you mouse over the boxes for the income groups you will see additional information concerning their current share of income taxes paid. You can also change federal excise taxes and corporate taxes.

Next you're given the option to expand or decrease tax expenditures such as the home mortgage interest deduction, the earned income tax credit, and the employer deduction for health insurance costs. These popular deductions translate into lost revenue. Reducing them means more revenue and expanding them means less. Mouse over each option to learn more.

Finally, you have a selection of possible reforms to Medicare or Social Security. Here your choice is to either leave them alone or enact the specific proposal.

When you're done, return to the tally box to see how much you changed total federal revenue.

On the right side of the screen you'll see a table and graph - each tracks the effects of your changes relative to the total economy.

Give it a try, I'd love to know what you think.