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2 Framing the Choices
Pages 35-48

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From page 35...
... Examples are the use of revenues to support low-income families or to compensate wounded veterans. In political terms, the federal budget represents decisions about the use of national resources for public benefits and social objectives and decisions on how to collect the revenues to finance the planned spending.
From page 36...
... Social Security and health benefits, mainly to the poor and elderly, roughly tripled as a proportion of total spending, while the share going to defense and veterans fell from about one-half of the total to about one-fourth; see Figure 2-1. Budget debates reflect fundamental differences: in people's values, interests, and beliefs; about questions of budget priorities or tradeoffs concerning the best allocation of resources among public goals; and on practical questions about the best way to use resources to advance agreedon priorities.
From page 37...
... the size of government. Fairness For many people, the distribution of public burdens and benefits is a principal measure of social justice (see, e.g., Penner, 2004; Rawls, 2001)
From page 38...
... On the revenue side, many people favor tax reductions as a policy to stimulate private investment and growth; others argue for a tax structure that encourages savings and rewards pro
From page 39...
... That is, we have neither adjusted our projections of future economic growth nor estimated future budget effects of changes in growth on the basis of changes in the mix of spending or the structure of revenues over time, even though modeling such relationships would be part of the ideal development of budget policy. Efficiency Although governments do not have a monopoly on inefficiency, many people believe that a good part of what government spends yields too little benefit to justify taking private resources for public purposes.3 Government leaders and managers are always looking for ways to identify and eliminate waste and to replace ineffective programs with more effective ones; however, there is no line in the federal budget for "waste, fraud, and abuse." Instead, the task of improving government's effectiveness requires collecting information about alternative uses of funds and the results they yield, and shifting efforts to the most effective uses.
From page 40...
... In the modern era, the most common view of government's responsibility for security has expanded to include responsibility to provide a minimum level of economic security to all. Even as the budget constraints have increased, many people and policy makers seek to expand health insurance coverage or other federal programs that protect households against financial shocks or economic losses -- policy changes that would increase spending but provide greater income security to many people.
From page 41...
... federal government makes more use than many other countries of special provisions in the tax code (tax expenditures) that reduce revenues and do not add to spending but do enlarge the role of gov ernment, increase deficits, and may distort private choices (Minarik, 2010)
From page 42...
... This view leads them to argue for relatively less spending on many social programs. They also are likely to believe that high marginal tax rates discourage private investment and work effort.
From page 43...
... People who believe taxes are a drag on the economy's efficiency or on individual and business incentives to work and invest generally favor low marginal tax rates and lower overall levels of taxation. Economists have tried to assess this contention.
From page 44...
... country governments (as a percentage of GDP) reflects more comprehensive systems of publicly financed pension and health insurance programs.
From page 45...
... For example, investments in environmental technologies that seed new industries can provide future job growth while improving energy efficiency and reducing carbon emissions, two other policy objectives. But imprudent or wasteful public investments divert resources from more productive uses; and, quite often, it is uncertain in advance whether a particular investment will be productive or wasteful.
From page 46...
... Conversely, because broad values do not dictate specific policy choices, people who have fundamental differences may sometimes agree on specific policies or programs. Still other differences -- whether framed as value choices or not -- may be driven by financial or other self-interest.
From page 47...
... A major example is discussed in Chapter 5: one goal of health care reform is to improve the use of resources in the broader health care system. However, this aspect of efficiency is not a major focus here.


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