Balancing the Federal Budget

How would you try to balance the federal budget (expenditures/outlays not exceeding revenues)? What areas of federal spending would you cut and why? In what areas would you try to increase federal revenues? Why would you choose those additional revenue sources?Balancing the budget would require steep spending cuts and tax increases—which would amount to a double body blow to the U.S. economy. This could actually increase the deficit by lowering tax revenue and causing the government to spend more on social programs.
Although the term balanced budget points towards a breakeven between surpluses and deficits, it can also be a budget that posts a surplus but not a deficit. Therefore, revenues may be greater than expenses in a balanced budget, but not vice versa.Components of a Balanced Budget

1. Revenues

For corporations and non-governmental organizations, revenues come from the sale of goods and/or services. For governments, the majority of revenues come from income taxes, corporate taxes, social insurance taxes, and consumption taxes.
2. Expenses

For corporations and non-governmental organizations, expenses include the amount that is spent on daily operations and factors of production, including rent and wages. For governments, expenses include spending on infrastructure, defense, healthcare, pension, subsidies, and other factors that contribute to the health of the overall economy.

Planning a balanced budget helps governments to avoid excessive spending and allows them to focus funds on areas and services that require them the most. Furthermore, achieving a budget surplus can provide funds for emergencies, e.g., if the government wishes to increase spending during a recession without having to borrow.

Balancing the budget also allows governments to save on the interest rate charges that accrue on large loans from lenders (i.e., other countries and/or organizations like the International Monetary Fund (IMF) and the World Bank) and to have control over policies during times of distress.

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