Term Paper on "National Budget Simulation Exercise"

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National Budget Simulation Exercise

The National Budge Simulation Exercise uses the 2006 budget proposed by the White House. Including an approximate $105 billion price tag for supplemental appropriations for the Iraq and Afghanistan operations, the proposed budget has a starting deficit of $401 billion. The goal is to adjust spending and tax expenditures to create a balanced federal budget. This paper reviews the set of program and policy priorities for the upcoming budget that were developed as a means of balancing the budget. The specific changes in the budget that meet these priorities is discussed. The short- and long-term impact of major budget changes on specific groups and the citizenry, in general, are illustrated as well. Lastly, the lessons learned from the exercise are described.

National Budget Simulation Exercise

Introduction:

The National Budge Simulation Exercise uses the 2006 budget proposed by the White House. Including an approximate $105 billion price tag for supplemental appropriations for the Iraq and Afghanistan operations, the proposed budget has a starting deficit of $401 billion. The goal is to adjust spending and tax expenditures to create a balanced federal budget. This paper reviews the set of program and policy priorities for the upcoming budget that were developed as a means of balancing the budget. The specific changes in the budget that meet these priorities is discussed. The short- and long-term impact of major budget changes on specific groups and the citizenry, in general, are illustrated as well. Lastly, the lessons learned from the exercise are described.

Program and Policy Priorities:

There are several program and policy priorities for the upcoming budget; however, given the severe amount of the budget deficit, many programs have to experience at least some budgetary cuts. The largest spending categories for the United States, in 2006, were military spending, Social Security, Medicare, non-Medicare health care, net interest, and aid to low-income families. it's not surprising that a larger percentage of the cuts had to come from these programs, even those programs that are critical to the United States.

In 2006, and even today, military spending was a critical component of national security. However, because of the significant amount of spending on the military, this area is an effective target for balancing the budget. The facet of military spending that needs to be a priority, in 2006, was spending in the Iraq and Afghanistan operations. Although there was a recommendation to cut military operation spending by ten percent, in the new budget there is an increase in spending, by 20%, in reconstruction aid. Other priority programs include: general science, space and technology; non-defense energy spending; natural resources and environment; agriculture; commerce and house; transportation; community and regional development; education; and training, labor and unemployment, as theses are all critical programs to the United State's infrastructure and advancement.

Changes in the Budget:

As mentioned, military spending was one of the areas that received the largest cuts. However, in an effort to facilitate the general priority of a more secure United States, military spending was increased in the area of reconstruction aid for Iraq and Afghanistan, in the hopes that reconstruction will help in the development of countries that were not hot beds for terrorist development. This, in the end, will help reduce the need for other military spending.

No changes were made in some of the core infrastructure programs. General science, space and technology, non-defense energy, education, and training, labor and unemployment all received no cuts, in an effort to protect these important programs. Other priority programs only received minimal cuts.

As an example, in the new budget, natural resources and environment received cuts of just over five percent. Only ten percent was cut from water resources, pollution control and abatement, and the other natural resources divisions. In the agriculture department, only $.85 billion was removed from the more than $26 billion budget. Commerce and housing likewise only received minimal deductions, despite the large amount of deficit that needed to be overcome.

One of the larger protected programs that received more than five percent reduction in funding was transportation. Highways, mass transit, railroads, and other transportation budgets all were reduced by ten percent, leaving air transportation and water transportation unchanged. Although these reductions are small, they can be overcome by private investment in many of these infrastructure areas, such as railroads and mass transit.

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