Fiscal Policy Basics
This percentage of GDP is the recommended limit for the U.S. budget deficit to maintain economic stability.
What is 3%?
The total amount of money the U.S. government owes to creditors.
What is the national debt?
The branch of government responsible for passing the federal budget.
What is Congress?
When the government borrows heavily, interest rates may rise, making it more expensive for businesses to take loans.
What is crowding out?
This famous phrase, often attributed to economists, means "There is no such thing as a free lunch."
Who is Milton Friedman?
The term for government decisions on spending, taxation, and borrowing to influence the economy.
What is Fiscal Policy?
The legal cap on how much money the federal government can borrow.
What is the debt ceiling?
The committee chaired by Jodey Arrington that oversees budgetary matters in the House of Representatives.
What is the House Budget Committee?
One way the government can reduce the deficit is by doing this to public programs, often leading to protests and debate.
What is cutting spending?
"The budget should be balanced, the treasury should be refilled, public debt should be reduced."
Who is Cicero?
The government department responsible for managing federal finances, issuing debt, and collecting taxes.
What is the U.S. Treasury Department?
A situation where government debt grows so large that it becomes unsustainable, causing economic crisis.
What is a financial heart attack?
The act signed into law in 2017 that lowered corporate tax rates but contributed to increased deficits.
What is the Tax Cuts and Jobs Act?
If the government keeps borrowing too much, this rating could be downgraded, making U.S. debt more expensive to repay.
What is the credit rating?
"Government spending is taxation."
Who is Milton Friedman?
The independent government office that provides economic and budgetary analysis for Congress.
What is the Congressional Budget Office (CBO)?
This financial expert recently warned U.S. lawmakers about the risks of unchecked deficit spending.
Who is Ray Dalio?
This type of spending refers to government programs such as Social Security and Medicare, which continue without annual approval.
What is mandatory spending?
Large budget deficits can push the government to increase these, which can slow economic growth.
What are taxes?
"Neither a borrower nor a lender be." This quote from Shakespeare is often referenced in fiscal debates.
Who is Polonius in Hamlet?
This legislative act sets limits on federal spending and deficit levels.
What is the Budget Control Act?
The percentage of U.S. government spending that currently comes from borrowed money.
What is approximately 20%?
The process by which the government injects money into the economy to stimulate growth, often through tax cuts or public spending.
What is a fiscal stimulus?
A country that fails to manage its debt and defaults on loans can experience this severe economic downturn.
What is a debt crisis?
"If something cannot go on forever, it will stop." This economist’s observation applies to unsustainable deficits.
Who is Herbert Stein?