Macro-Economic Choices the Three Major Categories for Essay

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Macro-Economic Choices

The three major categories for the federal government's revenues include: individual incomes taxes, corporate income taxes and social insurance taxes. Individual income taxes accounts for the largest amounts of spending for the federal government. As, these figure increased from: $1.1 trillion in 2010 to $1.3 trillion in 2011. While social insurance taxes are the second largest source of revenues with them providing at total of: $938 billion for 2010 and $978 billion for 2011. Then, there are corporate income taxes that are accounting for revenues of: $252 billion for 2010 and $292 for 2011. ("The Budget and Economic Outlook," 2011)

What are the three major categories of expenditures for the federal government? Please comment on each and indicate their relative importance to each other. Relative importance can be indicated by dollar amounts, percent of total revenue or expenditure or, though less informative, by ranking.

Three categories for the federal government's expenditures include: mandatory spending, discretionary spending and net interest. Mandatory spending accounts for the largest amounts of spending with these figures coming in at: $1.8 trillion for 2010 and $1.9 trillion for 2011. While, the overall levels of discretionary spending are: $1.1 trillion in 2010 and $1.2 trillion in 2011. Then there is the net interest which accounts for: $191 billion in 2010 and $220 billion in 2011. ("The Budget and Economic Outlook," 2011)

Discuss the current level of the Federal debt, and the past trend of the debt level. Discuss whether or not you are concerned about the current and future projected debt and level of associated interest expense.

In the past several years, the overall levels of federal debt have been increasing exponentially. As, they have gone from: $5.8 trillion (in 2008) to $8.2 trillion (for 2011). These figures are indicating that the past levels of spending have been extremely high.
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This is contributing to the dramatic rise these numbers. Where, this is accounting for 54% of the nation's total GDP production of $15.1 trillion for 2011. ("The Budget and Economic Outlook," 2011)

Assume you are the Chief Economic Advisor to the President of the United States and the President has asked you to review the deficit reduction proposals that were submitted by his commission (see link above). Choose the two commission recommendations you agree with the most and write an explanation to the President as to why those two should be enacted into law.

The two commission recommendations that I agree with are: the reduction in spending and reforming the tax code. The decline in spending is important, because this will account for 74% of these measures. As, the various entitlement programs such as: Social Security and Medicare must be restructured to fit in line with the budgetary challenges. Once this occurs, is when the federal government can eliminate wasteful spending and more effectively control the assistance they are providing. ("Debt Panels Plan would cut $4 Trillion," 2010)

Reforming the tax code is significant, because it would provide more effective avenues for the federal government to collect revenues. At the same time, it will encourage businesses to invest in America. As a result, these provisions should be implemented in to law. The reason why is because, effectively addressing these two issues will improve the ability of federal government to respond to a host of challenges. This is the point that they can offer more services to the general public. While at the same time, they are effectively controlling different aspects of their budget. ("Debt Panels Plan would cut $4 Trillion," 2010)

Economists classify macro-economic indicators as leading, lagging, or coincident. Define each classification…

Sources Used in Documents:


The Budget and Economic Outlook. (2011). CBO. Retrieved from:

Debt Panels Plan would cut $4 Trillion. (2010). CNN. Retrieved from:

What are Leading, Lagging and Coincident Indicators. (2011). Investopedia. Retrieved from:

Freid, C. (2011). Deficit Reduction Proposals. CBS News. Retrieved from:

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