Big Budget Dilemma

Recent developments in the United States over the budget have sparked up serious debate on what’s best for the economy. The US economy has been undergoing some serious recessions over the last decades, most recently in 2008. Three years later, statistics will tell that the economy has emerged from recession, but citizens don’t feel so sure. Just recently the debate was focused on the whether the 2012 budget should have an higher debt ceiling or cut some expenses.


The federal budget is divided into two categories: mandatory and discretionary spending. The mandatory spending is the portion of the budget that has to be spent because it was allocated by law. Medicare, Medicaid, Social Security. This budget does not require annual approval by congress because it’s statutory –in other words, congress had already approved it in a law. Discretionary spending is what the president submits for approval every year. This part of the budget contains monies for federal bureaucracy: defense, agriculture, homeland security etc…

The great chiasm in congress was created over the possibility to balance the budget to get rid of the deficit. The choices were to either raise the debt ceiling or cut spending. Cutting spending means that they would reduce expenses from all the categories to balance the budget. Raising the debt ceiling would meant that, in order to meet US’ obligations, money had to be borrowed from somewhere –social security or China are the traditional choices.

Cutting expenses seems like it’s the healthiest choice as it involves managing the actual resources, or live within the means. It would however, make people angry as a lot of people would lose their jobs, lose federal benefits.

Raising the debt ceiling would inject new capital into the economy to make it more efficient without having to compromise any jobs or commitments that the US already has. It will eventually create problems as those loans will have to be paid at some point thus digressing to an endless cycle of borrowing to get it paid off. It’s almost like paying a credit card with another credit card.

Sometimes decisions have to be made. Politicians struggle with this kinds of dilemmas often and it is hard to please everyone. So I then ask, what is the best decision? Well I will answer, depends on what you do, who you are, who employs you. Or in other words, whose ox is being gored?