NATIONAL & INTL POLICY
zhouwenx
V1602.8.18MEMOSReminders.pptxMEMOS
2.8.18
Did you think of all these points?
Again, the way you approach this is:
Here are the factors that your government should consider when trying to find out whether increasing the deficit/debt is a high or low risk.
For example: If the Interest rates that the government has to pay on treasury bonds are very low, then there is fairly low risk because….
If they are high or increasing, then there may be higher risk because….
DEBT: What are important factors to consider or questions to ask, when you are faced with the decision of whether to increase the deficit?
You should address these points somewhere in your memo. Some could be combined.
Are Interest rates at which the government would be borrowing low or high?
Economic Growth (current and projected), strong? Stagnating? (impact on tax revenue that helps servicing the debt)
Percent of budget spent on interest increasing/decreasing?
Debt to GDP ratio ( Fiscal Space?)
Recession? (is deficit increase only temporary?)
Credit Rating
What is the spending for that is financed with the deficit? Does it support future economic growth?
Is demand for treasury bonds strong, or are investors eager to sell them?
Just a few reminders on social security TOPIC
Social Security
Explain pay as you go
Reasons for funding gap and what will happen over the next few years until trust fund is depleted.
Make sure you have a mix of policies, not just one or two, and that you pick the ones that spread the burdens of your proposal.
In arguing against your opponent, point out what has to happen in order for the gap to filled out of the discretionary budget, and how that will impact your constituents (you can make up scenarios of why you are opposed to increasing the debt, for example you could say you are opposed because the country has already used up all the fiscal space)
Describe what Public Choice Theory says and how that could apply here
