CSULA Public Financial Management Discussion

  

Description

This discussion board asks you to engage a simulation on the federal budget, and then to reflect on the decisions you made–and what you learned from the exercise. The United States has operated on a deficit budget. As the assigned reading by the Congressional Budget Office states, the 2020 fiscal year budget was over $3 trilli0n, a massive increase over 2019 that is attributable in large part to federal spending in response to the COVID-19 pandemic. Pandemic response aside, the federal budget has experienced increasing deficits over the past five years, and indeed has run at deficit for most of the past 40 years, suggesting the political difficulty of budgetary balance.

The Next Ten Federal Budget Challenge will give you a flavor of the fiscal impacts of different choices one might make in attempting to balance the federal budget. Note that the FY2020 simulation is based on estimates that were made prior to the pandemic, and so do not reflect the current gravity of the fiscal situation at the federal level.

After completing the course readings and instructional media, please complete the Federal Budget Challenge. In working to balance the budget, make a note of the choices that you made, as you will share and reflect on these in the discussion board.

The Federal Budget Challenge is available at the following link:

https://www.federalbudgetchallenge.org/challenges/20/pages/overview?utm_source=next10&utm_medium=referral&utm_campaign=budget

After you have completed the budget challenge, respond to the discussion board questions below.

please respond to the following questions in a post of approximately 250 words, making explicit reference to the Budget Challenge, and incorporating the reading material. By please comment on or respond to the posts of at least two other

Briefly describe your background and exposure to public financial management.

What choices did you make in the Federal Budget Challenge? In doing this exercise, what surprised you the most?

What do you hope to take away from this class?pleaase write half a page for the discussion , i can only view the other discussions after i post mine so i need to finish the discussion and then i will be able to post 2 more and i need 2 replies to their discusssion.

November 9, 2020
Monthly Budget Review:
Summary for Fiscal Year 2020
In fiscal year 2020, which ended on September 30, the federal budget deficit totaled $3.1 trillion—more
than triple the shortfall recorded in fiscal year 2019. Much of that amount was the result of the economic
effects of the novel coronavirus pandemic and the legislation enacted in response; CBO and the staff of the
Joint Committee on Taxation estimated that the legislation would add $2.3 trillion to the deficit. During
the first six months of 2020, the deficit totaled $0.7 trillion; it rose by $2.4 trillion in the second half of the
fiscal year.
The deficit in 2020 was equal to 14.9 percent of the nation’s gross domestic product (GDP), up from
4.6 percent in 2019 and 3.8 percent in 2018; the deficit was the largest as a percentage of GDP since 1945.
As a result of the deficit and federal borrowing for other reasons—primarily to increase the Treasury’s cash
balance—federal debt held by the public rose to 100.1 percent of GDP, up from 79.2 percent of GDP at the
end of fiscal year 2019.
Fiscal Year Totals, 2015 to 2020
Billions of Dollars
2015
2016
2017
2018
2019
2020
Receipts
3,250
3,268
3,316
3,330
3,462
3,420
Outlays
3,692
3,853
3,982
4,109
4,447
6,552
Amount
–442
–585
–665
–779
–984
–3,132
Percentage of GDP
–2.4
–3.1
–3.4
–3.8
–4.6
–14.9
Deficit (–)
Sources: Congressional Budget Office; Department of the Treasury; Office of Management and Budget.
GDP = gross domestic product.
In 2020, the government’s revenues amounted to $3.4 trillion—$42 billion (or 1 percent) less than receipts
recorded in 2019. Revenues were 16.3 percent of GDP in 2020, the same as in 2019, remaining below the
average (17.3 percent) for the past 50 years.
Net spending by the government was $6.6 trillion in 2020—$2.1 trillion (or 47 percent) more than in 2019.
Outlays amounted to 31.2 percent of GDP in 2020, compared with 21.0 percent in 2019 and above the
50-year average of 20.6 percent.
Note: The amounts shown in this report include the surplus or deficit in the Social Security trust funds and the net cash
flow of the Postal Service, which are off-budget. Numbers may not sum to totals because of rounding.
MONTHLY BUDGET REVIEW: SUMMARY FOR FISCAL YEAR 2020
NOVEMBER 9, 2020
Total Receipts: Down by 1 Percent in Fiscal Year 2020
Some major sources of revenues declined and some increased, relative to the amounts recorded in 2019.
Revenues were significantly affected by the decline in economic activity and by legislation enacted in
response to the pandemic. 1
â– 
Reported receipts from individual income taxes, the largest source of revenues, fell by
$109 billion (or 6 percent). Such collections fell from 8.1 percent of GDP in 2019 to
7.7 percent in 2020, dropping below the average of 7.9 percent for the past 50 years.
o
Income taxes withheld from workers’ paychecks decreased by $83 billion (or
6 percent) because of legislative actions and a decline in economic activity. The
CARES Act allows most employers to defer payment of their portion of the Social
Security payroll tax and certain Railroad Retirement taxes on wages paid from
March 27, 2020, through December 31, 2020. In addition, FFCRA provides
refundable credits against payroll taxes to compensate employers for paid sick
leave and for family and medical leave, and the CARES Act provides a refundable
credit against payroll taxes for employee retention. Although those provisions
affect payroll taxes, the Treasury is recording the effects—at least initially—as
declines in individual income taxes.
o
Nonwithheld payments of income taxes fell by $32 billion (or 5 percent) because
of the decline in economic activity and the effects of legislation. The CARES Act
included several provisions that were expected to reduce estimated payments of
individual income taxes in 2020, in particular one that temporarily allows
taxpayers to offset more nonbusiness income with business losses.
o
Individual income tax refunds declined by $6 billion (or 3 percent).
1. Those laws include the Coronavirus Preparedness and Response Supplemental Appropriations Act, the Families
First Coronavirus Response Act (FFCRA), the Coronavirus Aid, Relief, and Economic Security (CARES) Act, and
the Paycheck Protection Program and Health Care Enhancement Act (PPPHCEA).
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MONTHLY BUDGET REVIEW: SUMMARY FOR FISCAL YEAR 2020
NOVEMBER 9, 2020
â– 
Recorded receipts from payroll (social insurance) taxes, the second-largest revenue
source, rose by $67 billion (or 5 percent). They increased from 5.9 percent of GDP in 2019
to 6.2 percent in 2020. When the Treasury receives payments of withheld taxes, it does not
initially observe a difference between payroll taxes and withheld individual income taxes.
Instead, it first allocates withheld taxes to one source or the other on the basis of estimates
made in advance of actual collections. As additional information becomes available,
including detailed tax return information, the Treasury makes periodic reallocations to
revise past allocations. The amounts recorded by the Treasury as payroll taxes for 2020
were largely determined before the onset of the pandemic, and the effects of subsequent
declines in wages and enacted legislation were recorded as lower individual income tax
receipts in 2020.
â– 
Receipts from corporate income taxes, the third-largest source of revenues, decreased by
$18 billion (or 8 percent) in 2019, declining from 1.1 percent of GDP to 1.0 percent. Those
revenues as a percentage of GDP remain among the lowest recorded since 2009 and below
the average of 1.8 percent of GDP over the past 50 years. Corporate income tax receipts
include payments for activity in the 2019 and 2020 tax years, and they reflect the economic
disruption caused by the pandemic and the effects of related legislation.
â– 
Receipts from other sources increased by $18 billion (or 7 percent), rising from 1.3 percent
of GDP in 2019 to 1.4 percent in 2020. An increase in receipts from Federal Reserve
remittances was partially offset by declines in excise taxes and customs duties, with smaller
changes to other sources.
o
Remittances from the Federal Reserve rose by $29 billion (or 55 percent), in part
because of lower short-term interest rates, which reduce the central bank’s interest
expenses and therefore increase its remittances to the Treasury. As part of its
efforts to carry out monetary policy in response to the pandemic, the Federal
Reserve also has significantly increased its holdings of assets, an action that tends
to further boost remittances.
o
Excise taxes fell by $12 billion (or 12 percent). Declines in those collections
resulted from the suspension—for most of the calendar year—of certain aviation
excise taxes and from a general reduction in economic activity. Those declines
were offset in part by the final payment of a tax on health insurance providers,
which was collected in 2020 but had not been collected in 2019. That tax has been
repealed for all future years.
o
Customs duties declined by $2 billion (or 3 percent), reflecting a drop in imports.
That decline was more than offset by increases of $3 billion (or 9 percent) in
miscellaneous fees and fines and of $1 billion (or 6 percent) in estate and gift
taxes.
Total Receipts
Billions of Dollars
Percentage
Change,
2019 to 2020
Major Source
2018
2019
2020
Individual Income Taxes
1,684
1,718
1,609
Payroll Taxes
1,171
1,243
1,310
5.4
205
230
212
–8.0
271
3,330
271
3,462
289
3,420
6.8
–1.2
16.3
16.3
16.3
n.a.
Corporate Income Taxes
Other Receipts
Total
Percentage of GDP
Sources: Congressional Budget Office; Department of the Treasury; Office of Management and Budget.
GDP = gross domestic product; n.a. = not applicable.
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–6.4
MONTHLY BUDGET REVIEW: SUMMARY FOR FISCAL YEAR 2020
NOVEMBER 9, 2020
Total Outlays: Up by 47 Percent in Fiscal Year 2020
Outlays in fiscal year 2020 were $6.6 trillion—$2.1 trillion (or 47 percent) higher than they were during the
same period in 2019, CBO estimates. Outlays increased for all major spending categories and for most
federal agencies. Large increases were mostly linked to the pandemic and the federal government’s
response to it.
The Small Business Administration’s outlays were $577 billion (mostly for the Paycheck
Protection Program), compared with $456 million during the same period in 2019.
Outlays for unemployment compensation were $445 billion more than in 2019.
Payments of refundable tax credits—including recovery rebates that began in April under
the CARES Act—totaled $271 billion more than in 2019.
Outlays totaling $149 billion were made from the Coronavirus Relief Fund, created by the
CARES Act, which provides aid to state, local, tribal, and territorial governments.
Outlays for the Public Health and Social Services Emergency Fund (included in the
“Other” category below) were $112 billion, compared with $4 billion during 2019.
Medicare outlays were $125 billion (or 19 percent) more than in 2019, largely because of the
expansion of two programs. First, the CARES Act expanded the Accelerated Payment
Program for Medicare Part A providers during the public-health emergency. Second, the
Centers for Medicare & Medicaid Services expanded the Advance Payment Program to
Part B suppliers via regulation. The expansion of those programs began in April. Both
programs issue payments to providers in advance of expected Medicare claims that will
be recouped from future claims. Spending also increased in part because of higher payment
rates for beneficiaries enrolled in Medicare Advantage plans.
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MONTHLY BUDGET REVIEW: SUMMARY FOR FISCAL YEAR 2020
NOVEMBER 9, 2020
Total Outlays
Billions of Dollars
Percentage Change,
Major Program or Category
2018
2019
2020
Social Security Benefits
977
1,033
1,084
5.0
Medicare a
585
648
773
19.3
Medicaid
Subtotal, Largest
Mandatory Spending
Programs
389
409
458
12.0
1,951
2,090
2,315
10.8
Small Business Administration
2019 to 2020
*
*
577
n.m.
Unemployment Benefits
32
31
476
n.m.
Refundable Tax Credits
Coronavirus Relief Fund
77
0
88
0
359
149
n.m.
n.a.
DoD—Military b
601
654
690
5.6
Net Interest on the Public Debt
371
423
387
–8.5
1,076
4,109
1,159
4,447
1,597
6,552
37.7
20.2
21.0
31.2
n.a.
Other
Total
Percentage of GDP
47.3
Sources: Congressional Budget Office; Department of the Treasury; Office of Management and Budget.
DoD = Department of Defense; GDP = gross domestic product; n.a. = not applicable; n.m. = not meaningful;
* = between zero and $1 billion.
a. Medicare outlays are net of offsetting receipts.
b. Excludes a small amount of spending by DoD on civil programs.
Outlays for the Department of Education (included in “Other”) were $100 billion higher
than in 2019. Much of that increase occurred because the Administration recorded large
upward revisions to the subsidy costs of student loans made in previous years. Those
revisions were made primarily because of newly available data that showed lower income for
borrowers in income-driven repayment plans and because payments, interest accrual, and
involuntary collections were suspended on certain loans in response to the pandemic. Outlays
also were higher because of additional education funding provided in the CARES Act.
Spending for Social Security grew by $51 billion (or 5 percent) because of increases both in
the number of beneficiaries (1.8 percent) and in the average benefit payment (3.3 percent).
Spending for Medicaid was $49 billion (or 12 percent) higher than in 2019, largely because
of the legislative response to the pandemic. In particular, legislation raised federal Medicaid
matching rates by 6.2 percentage points and required states to maintain coverage for all
Medicaid enrollees who were enrolled during the emergency period, regardless of changes in
their circumstances that might otherwise cause them to lose eligibility.
Spending by the Department of Homeland Security was $36 billion higher than in 2019.
That increase is mostly the result of spending from the Disaster Relief Fund to pay for
unemployment benefits under the provisions of a memorandum issued by the Administration
in August. 2
2. See the White House, Presidential Memoranda, “Memorandum on Authorizing the Other Needs Assistance
Program for Major Disaster Declarations Related to Coronavirus Disease 2019” (August 8, 2020),
https://go.usa.gov/xGFJr.
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MONTHLY BUDGET REVIEW: SUMMARY FOR FISCAL YEAR 2020
NOVEMBER 9, 2020
Outlays from the Department of the Treasury’s Exchange Stabilization Fund (included in
“Other”) were $31 billion, compared with −$513 million in 2019, almost entirely because of
equity investments in certain Federal Reserve facilities, which provide liquidity for a wide
range of economic activities. Those facilities are designed to address financial strain caused
by the pandemic. CBO expects that the increase in the deficit caused by those outlays will be
mostly offset in future years by payments to the Treasury from the facilities’ proceeds.
Spending by the Department of the Treasury for the new aviation worker relief program
(included in “Other”) totaled $28 billion.
Outlays for the Food and Nutrition Service were $22 billion higher than in 2019, mostly
related to the Supplemental Nutrition Assistance Program.
Net outlays for interest on the public debt decreased by $36 billion compared with 2019; lower interest
rates and lower inflation more than offset the effects of a larger federal debt. As a share of GDP, net
interest fell from 2.0 percent in 2019—its highest level since 2001—to 1.8 percent.
Estimated Deficit in October 2020
The government recorded a deficit of $284 billion in October, CBO estimates, $149 billion more than the
shortfall recorded in the same month last year. Revenues fell by $8 billion (or 3 percent), largely because of
a decline in collections of individual income taxes. Outlays this October were $141 billion (or 37 percent)
higher than in the same month last year because of greater spending for many government programs, in part
driven by the government’s response to the pandemic. Shifts in the timing of payments (because
November 1 fell on a weekend) also increased the deficit in October; if not for those shifts, the outlay
increase in October would have been $78 billion (or 20 percent) and the deficit in that month would have
been $221 billion.*
Each month, CBO issues an analysis of federal spending and revenues for the previous month
and the fiscal year to date. This report is the latest in that series, found at
https://go.usa.gov/xfwBH. In keeping with CBO’s mandate to provide objective, impartial
analysis, it makes no recommendations. Dawn Sauter Regan, Jon Sperl, and Jennifer Shand
prepared the report with assistance from Aaron Feinstein and with guidance from
Christina Hawley Anthony, Theresa Gullo, Sam Papenfuss, and Joshua Shakin. It was reviewed
by Mark Hadley and Robert Sunshine, edited by Kate Kelly, and prepared for publication by
Janice Johnson. An electronic version is available on CBO’s website,
www.cbo.gov/publication/56746.
On December 10, 2020, CBO reposted this report to correct three values related to October 2020 outlays.
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