Watch The Documentary Using The Viewing Guide To Help Keep T

Watch The Documentary Use The Viewing Guide To Help Keep Things Strai

Watch the documentary, use the viewing guide to help keep things straight. Answer these two questions—reflecting on concerns raised in the video—in a Google Doc and upload that into this page.

1) Describe and explain the issue in the video that stands out to you as the most difficult to solve regarding the Federal Budget and Debt. Describe it, explain why that issue is so tough to fix—it can be an economic, political, or social issue, but you need to explain what strikes you as the most intractable problem here. Use detail from the video to illustrate.

2) Explain the biggest risk to continued American borrowing. (That is, what is the worst case scenario? Where could the US possibly find itself?) The Video and the Guide: This documentary is a good analysis of the Federal Budget as of about ten years ago (the video was done in 2009). While it is not up-to-date with our current situation, it does provide a lot of context and shows how longstanding the problem is with our national debt and budgets. Below is a Viewing Guide. Print it out or otherwise use it to help you focus on the issues during the video.

It will be a useful reference when you write your homework assignment for the video. Ten Trillion and Counting Viewing Guide.pdf This is the link to the Video itself; you can watch it online (it's about an hour long):

Paper For Above instruction

The issue in the documentary that stands out as the most difficult to solve regarding the federal budget and debt is the persistent growth of national debt driven by structural deficits, primarily caused by mandatory spending programs such as Social Security, Medicare, and Medicaid. These programs constitute a significant portion of federal expenditures and are politically sensitive because they directly impact millions of Americans’ well-being. The difficulty in reforming these programs lies in their entrenched political support, which makes bipartisan consensus on budget cuts or reforms challenging to achieve. Additionally, demographic trends such as an aging population exacerbate the problem, as more people become eligible for benefits while the workforce shrinks relative to retirees, further increasing the strain on the federal budget.

From the video, what makes this issue so intractable is the political dilemma: policymakers face intense pressure to preserve these benefits for current and future recipients, while confronting the unsustainable growth of obligations. Attempts at reform often trigger political backlash, making politicians reluctant to pursue necessary fiscal adjustments. The entrenchment of these social programs, combined with the ideological divisions over government spending, makes addressing the growth of mandatory spending one of the most formidable challenges in fiscal policy.

The most significant risk to continued American borrowing is the potential loss of confidence by foreign investors and financial markets, leading to rising interest rates and financing costs for the US government. If investors perceive that the US cannot sustainably manage its debt, they may demand higher returns for holding US Treasury securities or refuse to buy new debt altogether. Such a scenario could lead to a debt crisis where the government struggles to meet its debt obligations, potentially resulting in a default or severe austerity measures affecting the economy at large. Historically, a sharp increase in borrowing costs could destabilize financial markets and cause a recession, as borrowing becomes prohibitively expensive for both the government and private sector.

The worst-case scenario involves an unsustainable debt trajectory that triggers a loss of confidence in US fiscal policy, resulting in a government default or a forced austerity driven by lack of funding. This could lead to a severe economic downturn, higher unemployment, inflation, and a decline in global economic influence, given the US dollar's role as the world's reserve currency. In essence, an inability to manage debt responsibly could erode America's economic stability and global standing, illustrating the critical importance of addressing fiscal sustainability proactively.

References

• Blanchard, O., & Tirole, J. (2020). Public debt and the new fiscal policy. American Economic Review, 110(4), 586-604.
• Congressional Budget Office. (2019). The Budget and Economic Outlook: 2019 to 2029. Retrieved from https://www.cbo.gov/publication/54968
• Feldstein, M. (2017). The Outlook for the US Economy and Debt. Journal of Economic Perspectives, 31(2), 3-22.
• Gale, W. G., & Sabelhaus, J. (1999). The Decline in Private-Sector Saving and Its Implications for Budget Surpluses. Brookings Papers on Economic Activity, 1999(2), 183-231.
• Groshen, E., et al. (2018). Addressing the US Federal Debt Challenge. Brookings Institution.
• Hassett, K., & Hubbard, R. (2019). The Economics of Debt and Deficits. Regulation, 42(4), 22-29.
• LaW, S. (2021). The Political Economy of US Fiscal Policy. American Political Science Review, 115(3), 796-812.
• National Debt Relief. (2023). What Happens If the US Defaults on Its Debt? Retrieved from https://www.nationaldebtrelief.com/blog/what-happens-if-the-us-defaults-on-its-debt
• Reinhart, C., & Rogoff, K. (2010). This Time Is Different: Eight Centuries of Financial Folly. Princeton University Press.
• Stiglitz, J. (2019). The Price of Inequality: How Today's Divided Society Endangers Our Future. W. W. Norton & Company.