Defense Outlays

Answer Question 3 at the end of Chapter 2 (its on p. 99 of my teacher edition). It starts: "Identify the strategy represented in each of the following arguments taken from budget discussion:". There are arguments labeled a. through o. 

Upload a document in which you list each argument and the strategy represented. 

Disregard the last sentence of the question, which states, "If confronted by such arguments and strategies, which questions would you raise?" 

Defense outlays

294,363

603,457

Nondefense outlays

1,494,587

2,902,632

Composite outlay deflators (2009

5

1.00)

Defense                           

0.7235                            1.0510

Nondefense                           

0.8134                            1.0893                           

a.  Compute the percentage change for federal defense and nondefense outlays

in current-year dollars from 2000 to 2014. Divide that change into its real and

price components.

b.  For nondefense outlays, convert the deflator base to 2000

5

1.0000, and recal-culate  the  absolute  change  in  these  real  dollars  and  compare  that  with  the 

absolute change with 2009

5

1.000. Why might budget strategists try to use

one or the other of these two numbers to argue for more or less spending? Is

either of the two base years more correct? Explain. Compute and compare the

real percentage increases using the two different base years.

3.

Identify the strategy represented in each of the following arguments taken from

budget discussions:

a.  A bill to increase the number of women eligible for Medicaid-funded prenatal

assistance in this state would not only save lives, but also cut state costs for

care  of  low-birth-weight  babies  and  children  with  disabilities.  Studies  have 

shown that every dollar spent on prenatal care reduces long-term health-care

expenditures by $3.38.

b.  The change in the Board of Health sanitation position from full-time to part-

time will demolish the inspection program. Rather than accepting the weak-

ened program, we would prefer that the program be terminated.

c.  Faculty salaries at Enormous State University rank seventeenth among eigh-

teen  universities  with  which  it  competes.  Substantial  improvements  in  pay 

must come in this budget year if major defections are to be prevented.

d.  In March, the second of two school-funding referenda failed (by a 2–1 mar-

gin)  in  the  Riverside-Brookfield  (Illinois)  School  District.  The  school  board 

responded by proposing the elimination of the girls’ badminton, swimming,

and cross-country teams; the boys’ soccer, tennis, and wrestling teams; seven

additional coaching programs; the cheerleading program; and the Pup-ettes (a

pompom squad). A phase-out of the German language program at the school

had been started before the failure of the referendum.

e.  The Unipacker II will return its full purchase cost in lower labor and mainte-

nance expense within two years of initial operation.

f.  An  editorial  in  the 

Philadelphia  Inquirer 

(September  24,  2008)  argues  for  a 

regional sales tax to support funding for the arts on these grounds: “Making

sure attractions thrive is about more than satisfying the need for creative out-

let. It’s about dollars and good economic sense: The groups surveyed for the

study provide 19,000 jobs, generate $657 million in yearly revenue, and raise

$526 million in contributions.”

g.  The AIDS education program I have proposed for the biennial budget carries

a price tag of only $200,000. This cost represents an absolutely trivial percent-

age of the $10 billion the state spends each year and will have no impact on

the state fiscal crisis. Furthermore, the medical expense to the state associated

with even one AIDS case is more than $100,000, so it is the most misguided,

mean-spirited, and shortsighted of economies to deny this proposal.

h.  The governor proposes major reductions (80 percent of the $321 million per

year  program)  in  state  general  assistance,  a  program  that  provides  medical 

coverage  at  about  $120  per  month  to  its  131,000  recipients  (adults  with  no 

children or other dependents). This reduction may cost more than the amount

it  saves  if  only  a  fraction  of  the  recipients  end  up  in  mental  institutions  or 

shelters. For example, keeping one-tenth of the current recipients in the state

psychiatric hospital for ninety days would cost more than $200 million, and

keeping  one-tenth  of  the  recipients  in  a  shelter  for  ninety  days  would  cost 

$22 million. The reduction is clearly a false economy.

i.  In response to budget reductions driven by a declining tax base, the Detroit

school  system  announced  that  parents  would  have  to  purchase  toilet  paper 

for the public schools for the upcoming school year.

j.  An internal memo leaked to the media said that cuts to the National Weather

Service  budget  in  FY  2005  would  have  a  critical  impact  on  its  life-saving 

mission. For instance, “warning lead times will shorten and tornado detec-

tion  rates  will  decrease  (as  will  most  other  NWS  performance  standards) 

leading  to  the  troubling  and  tragic  conclusion  that  there  will  be  unwar-

ranted loss of life.” Its operating budget for FY 2005 had been reduced by

2 percent.

k.  Former President George W. Bush left his request for funding to support the

wars in Iraq and Afghanistan out of his budget submission for the total gov-

ernment and then submitted a separate request a few months later.

l.   In  response  to  a  countywide  instruction  to  constrain  spending,  the  Fairfax 

County,  Virginia,  fire  department  announced  that  it  would  eliminate  “First 

Team,” a program of support to family members of injured firefighters, for an

annual saving of $6,000.

   m.  The police department of the City of Palm Bay, Florida, announced that, in

response  to  a  reduced  budget  and  higher  fuel  costs,  it  would  discontinue 

responses to burglaries in which the home or car owner had failed to lock his

home or car.

n.  In response to a state fiscal crisis, the director of the Michigan Department of

Human Services proposed cutting money for food banks and homeless shel-

ters and for burials for the dead.

o.   Economist  and  former  Secretary  of  Treasury  Larry  Summers  argues  in  the 

(October 13, 2015): “if we were able to raise the gas tax by 40  cents  and  repair  our  highways  and  roads,  we  would  create  no  new  net 

burden  on  consumers:  the  benefit  in  reduced  vehicle  operating  costs  would 

at the very least offset their higher gas bills. In fact, since our cost estimate is

conservative, the net effect on consumers would most likely be positive.”