The IMF wrote: “On the fiscal front, the deficit reduction in 2013 has been excessively rapid and ill-designed. In particular, the automatic spending cuts (“sequester”) not only exert a heavy toll on growth in the short term, but the indiscriminate reductions in education, science, and infrastructure spending could also reduce medium-term potential growth. These cuts should be replaced with a back-loaded mix of entitlement savings and new revenues (International Monetary Fund 2013).”

Imagine negotiations regarding raising the debt ceiling result in an agreement to cut spending growth by 5% across the board. Which parts of the budget would be subject to the cuts? Discuss the advantages and disadvantages of this sort of spending growth limit.

Answer rating: 100% (QA)

The parts of the budget subject to the cuts would be discretionary spending and nondefense mandatory ... View the full answer