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Chapter 12. Politics, Surpluses, Deficits, and Debt

Dr. Tufte's ECON 2020 PowerPoint slides to accompany Colander's text.. 2. 12.A. Defining Surpluses and Deficits. What is a surplus?What is a deficit?12.A.1. Financing the Deficit12.A.2. Arbitrariness of Defining Surpluses and Deficits12.A.3. Many Right Definitions12.A.4. Surpluses and Deficits as Summary Measures.

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Chapter 12. Politics, Surpluses, Deficits, and Debt

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    1. Dr. Tufte's ECON 2020 PowerPoint slides to accompany Colander's text. 1 Chapter 12. Politics, Surpluses, Deficits, and Debt Is our view of government financing affected by the time horizon we envision? 12.A. Defining Surpluses and Deficits 12.B. Nominal and Real Surpluses and Deficits 12.C. Structural and Passive Surpluses and Deficits 12.D. The Definition of Debt and Assets 12.E. U.S. Government Deficits and Debt: The Historical Record 12.F. The Modern Debate about the Surplus

    2. Dr. Tufte's ECON 2020 PowerPoint slides to accompany Colander's text. 2 12.A. Defining Surpluses and Deficits What is a surplus? What is a deficit? 12.A.1. Financing the Deficit 12.A.2. Arbitrariness of Defining Surpluses and Deficits 12.A.3. Many Right Definitions 12.A.4. Surpluses and Deficits as Summary Measures

    3. Dr. Tufte's ECON 2020 PowerPoint slides to accompany Colander's text. 3 12.A.1. Financing the Deficit To raise cash to pay for government programs, the government sells what? Who buys them?

    4. Dr. Tufte's ECON 2020 PowerPoint slides to accompany Colander's text. 4 12.A.2. Arbitrariness of Defining Surpluses and Deficits Can payables and receivables be accounted for in unusual ways? Generally speaking, is government accounting practice as “solid” as corporate practice? What part of our government is counted in an unusual way?

    5. Dr. Tufte's ECON 2020 PowerPoint slides to accompany Colander's text. 5 12.A.3. Many Right Definitions Is there one right way to account for the government’s budget? However, once an accounting method is settled upon, should it be used consistently?

    6. Dr. Tufte's ECON 2020 PowerPoint slides to accompany Colander's text. 6 12.A.4. Surpluses and Deficits as Summary Measures Even if the accounting underlying the government budget is suspect, can we still use the resulting numbers to make comparisons across time?

    7. Dr. Tufte's ECON 2020 PowerPoint slides to accompany Colander's text. 7 12.B. Nominal and Real Surpluses and Deficits Generally, what do we care about, nominal or real measures? Which form is the deficit/surplus announced in? Is the debt that is issued by the government nominal or real? What happens to the real value of the national debt when there is inflation? Does that effect move us towards a surplus or a deficit?

    8. Dr. Tufte's ECON 2020 PowerPoint slides to accompany Colander's text. 8 12.C. Structural and Passive Surpluses and Deficits Do tax revenues move in the same direction as output? Does this happen actively or passively? What does this do to the announced deficit/surplus in recessions? Expansions? How do many states create problems for themselves with this issue?

    9. Dr. Tufte's ECON 2020 PowerPoint slides to accompany Colander's text. 9 12.D. The Definition of Debt and Assets What’s a debt? What’s a stock? Are they stock or flow variables? 12.D.1. Debt Management 12.D.2. Difference between Individual and Government Debt

    10. Dr. Tufte's ECON 2020 PowerPoint slides to accompany Colander's text. 10 12.D.1. Debt Management What government agency makes decisions about the debt? What sort of decisions might they need to make? Debts should be compared to what? Why? Why doesn’t the government have a capital budget? Should it? Can it? Who owns most of the government’s debt?

    11. Dr. Tufte's ECON 2020 PowerPoint slides to accompany Colander's text. 11 12.D.2. Difference between Individual and Government Debt Can you list three reasons why government debt is not like personal debt?

    12. Dr. Tufte's ECON 2020 PowerPoint slides to accompany Colander's text. 12 12.E. U.S. Government Deficits and Debt: The Historical Record According to the figure, when were deficits the largest? 12.E.1. The Debt Burden 12.E.2. U.S. Debt Relative to Other Countries 12.E.3. Interest Rates and Debt Burden

    13. Dr. Tufte's ECON 2020 PowerPoint slides to accompany Colander's text. 13 12.E.1. The Debt Burden How does the text measure the size of the debt burden? This is a problem because what sort of comparison is made? Some better comparisons would be what? Is the data easy to come by to make those comparisons?

    14. Dr. Tufte's ECON 2020 PowerPoint slides to accompany Colander's text. 14 12.E.2. U.S. Debt Relative to Other Countries How does U.S. national debt compare to other countries? How does U.S. national debt compare to different periods in our history?

    15. Dr. Tufte's ECON 2020 PowerPoint slides to accompany Colander's text. 15 12.E.3. Interest Rates and Debt Burden Is comparing debt service to GDP a good way to make a comparison? What other variable will affect this sort of comparison? What does such a comparison tell us about the size of the debt?

    16. Dr. Tufte's ECON 2020 PowerPoint slides to accompany Colander's text. 16 12.F. The Modern Debate about the Surplus How recent is this debate? 12.F.1. Why Did the Surplus Come About? 12.F.2. What Should the Government Do with the Surplus? 12.F.3. Implications of the Government’s Cash Flow Accounting System 12.F.4. The Social Security System 12.F.5. Why the Surplus Is Not As Large As It Looks 12.F.6. The Real Problem and the Real Solution

    17. Dr. Tufte's ECON 2020 PowerPoint slides to accompany Colander's text. 17 12.F.1. Why Did the Surplus Come About? Since when have deficits been common? What political features have led to reductions in deficits? The fact that we have a surplus now is probably because of what?

    18. Dr. Tufte's ECON 2020 PowerPoint slides to accompany Colander's text. 18 12.F.2. What Should the Government Do with the Surplus? A naďve answer might be that the government should do what with taxes if there is a surplus? This is naďve because the government uses what sort of accounting system?

    19. Dr. Tufte's ECON 2020 PowerPoint slides to accompany Colander's text. 19 12.F.3. Implications of the Government’s Cash Flow Accounting System How does his choice of accounting system potentially “goof up” the way people think about whether the government is well-financed (or not)?

    20. Dr. Tufte's ECON 2020 PowerPoint slides to accompany Colander's text. 20 12.F.4. The Social Security System What kind of system is the U.S. Social Security System? What features of the U.S. cause problems for such a system? Is the Social Security Trust Fund a reasonable idea?

    21. Dr. Tufte's ECON 2020 PowerPoint slides to accompany Colander's text. 21 12.F.5. Why the Surplus Is Not As Large As It Looks Most of the U.S. budget surplus is already committed to (nut not yet spent on) what?

    22. Dr. Tufte's ECON 2020 PowerPoint slides to accompany Colander's text. 22 12.F.6. The Real Problem and the Real Solution What is the real problem with a system like Social Security? What are three types of solutions for that problem?

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