Sydney Moretto

Signature Assignment

Part 1

Macroeconomics was a term that I had heard of before but wasn’t sure what all was

entailed to the term. I took a microeconomics class as a senior in high school because it was

required to do so. I had absolutely no clue what economics really was until I took that class.

After completing the microeconomics course I was so glad I did. It was very useful to my

everyday life and made a lot of things make sense that I didn’t understand before. I needed to

take macroeconomics for my major. I had taken microeconomics so I thought it wouldn’t be too

bad. I feel like macroeconomics was a little bit harder for me to understand than micro was. I’m

not sure if it’s because it’s on the national level rather than focusing on the individual like

microeconomics. A low for me this semester would be that macroeconomics was a lot harder for

me to grasp than microeconomics. I feel like I struggled more in taking this course. I think that

taking this course in person would have been more beneficial for me because I maybe would’ve

understood some of the material better. If you didn’t understand one concept then some of the

other concepts didn’t make sense. I found myself looking up videos on YouTube to better

explain some of the topics better, especially the math portions. I’m a visual learner when it

comes to things that deal with math. The highs of taking this course would be that I learned a lot

of information that is very useful. Not only is it useful information but I think it’s important

information. People don’t understand a lot of things that go on in our economy but complain

about it. If they knew more about the things going on in our economy they would understand

why things are happening. Taking this course has changed my look on the economy. Now that I

better understand things going on in the economy and why they are happening, I think I will
appreciate things more. I didn’t know why things were happening or why certain decisions were

being made but now I have a better understanding of the economy we live in today and how it

has changed over time. Inflation is the one term that I learned from the most this semester and

apply to the economy I live in. I’ve heard my parents say that they remember being able to buy

candy with nickels and dimes or fill up their gas tanks on a few dollars. I was always thought to

myself why haven’t prices stayed the same? Inflation is a basic concept that describes the rate at

which prices have increased over time. I’ve heard the term before but didn’t really know the role

it played in the economy. Inflation is often viewed as a bad thing, it can have positive

consequences like getting raises at work and bigger tax deductions. I recently received a raise at

work and I can appreciate inflation for that!

 Part 2

Let’s take the federal budget deficit for fiscal year 2013 that ended on September 30 at

$680 billion. My job is to balance it for the fiscal year of 2014. I thought of three ways to try and

balance the federal government budget: revenue increases, discretionary spending cuts, and

entitlement reforms. Starting with revenue, my idea would be a tax reform and simplification

designed to raise $80 billion per year, by eliminating deductions and lowering marginal tax rates.

Next the entitlement reform, a 10 percent cut in Medicare spending, tightening the eligibility

standards for disability payments, a phased increase in the Medicare eligibility age to 70, a

switch to the chained CPI for inflation adjustments in entitlement programs, and a reduction in

Medicare payments to hospitals with frequent readmissions. Also, to raise the age for Social

Security eligibility to 70. Those under 70 would stop receiving Social Security payments until

they reached the new, older eligibility age. This change would save about $250 billion per year.

In the area of discretionary spending, we could end the war on drugs, decriminalizing marijuana,

and taxing it. A smaller cut would be the repeal of the Bacon-Davis labor rules that inflate wages

on federally funded projects and cutting the federal travel budget in half. Those alone would

save close to $16 billion. In total these spending cuts would save close to $260 billion a year and

that represents 40% of the amount needed to balance the budget. Adding all three ways together

would not only balance the budget but result in a budget surplus. I would run into some problems

trying to get Congress to pass some of those things. It would be difficult for Congress to pass:

lifting the Social Security eligibility age to 70, cutting Medicare spending by 10 percent, and

ending the war on drugs and decriminalizing marijuana. Drug law changes wouldn’t be the

biggest stretch. Everyone wants health care spending to go down and that’s effecting the

economy now. The Medicare cuts would mostly bother the elderly, the doctors, and the hospitals
that receive the payments. That leaves the change in the Social Security eligibility age. For

obvious reasons, removing people under the age of 70 from the program would be a very

controversial issue. I think that it is really just a faster version of the reform that everyone knows

is necessary for the economy. The retirement age is already on a slow trend going upward, this

just makes it instantaneous to happen. If the Social Security reform was phased in over five

years, the budget would probably be balanced in four years. By taking all three of the ways I

listed, revenue increases, discretionary spending cuts, and entitlement reforms, the budget

balances out. The budget possibly actually ends up in a surplus. Yes, these are numbers from

2013 and some of these things are changing as we speak. The job of balancing the budget would

be extremely difficult. I would not want this as my job with the federal budget in my hands.