"Deficit and Debt"Introduction
Students have learned how the U.S. federal government spends
revenues, collects taxes, and owes money in the form of the
national debt. In this exercise, students will explore the
effects of budget deficits and surpluses on the economy and
the national debt. Lesson Description
Students will use information from the United States Office
of Management and Budget Web site to discover how budget deficits
and surpluses affect our economy. They will read a history
of our nation's budget deficits, learn why a budget surplus
is important, and understand the relationship between deficits
and the debt. Students will then answer four questions and
apply this information by preparing a television news report
on the status of the federal budget and national debt. Previous Knowledge Expected
budget surplus: government revenues exceed expenditures
budget deficit: government expenditures exceed revenues
Applied
Content Standards (from the Council for Economic Education)
Standard 20: Federal government budgetary policy and
the Federal Reserve System's monetary policy influence the
overall levels of employment, output, and prices. Instructional
Objectives- Students will to able to draw conclusions about the relationships
between government revenues and spending and between budget
deficits and the national debt.
- Students will be able to use this knowledge to prepare
a television news broadcast on the status of the federal budget
and the national debt.
Student
Web Activity Answers - A budget surplus was expected. Starting in 1998, the government was collecting more revenue than it was spending on government programs. This surplus of money did not last, however, and budget deficits returned in 2001.
- In the late 1990s, increased capital gains due to the stock market surge generated increased federal revenue. Also the expanding economy generated higher tax revenues.
- The slowing economy, beginning in early 2001, along with the shifting of governmental priorities after September 11, 2001 altered the budget outlook very rapidly. The commitment to engage in the war on terrorism and the creation of the Department of Homeland Security added new areas for government funding.
- Current and future budget forecasts will only project three to five years into the future. This acknowledgement that events affecting the economy often occur rapidly is hoped to prevent government budget forecasts based on too much speculative data.
- Students' broadcasts will vary.
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