A paper that could be very helpful in regards to debates of what is indeed the best levels:
Optimal Government Spending and Taxation in Endgenous Growth Models
One thing to realize is that there will always be some level of unemployment. I believe the preferred general benchmark is 4%. I don’t know how much UE it is right now but when I say something like “full” employment, I mean that all the jobs demanded by the amount of economic activity are filled.
Fair warning: this is a rather Keynesian approach.
The Instant Economist, Dr. John Pool and Dr. Ross LaRoe
Bathtub analogy for the US economy:
Water level is economic activity (production of GDP)/employment
The government controls the economy by influencing the overall level of consumer expenditures, investment expenditures, and government expenditures.
Since this topic’s economic factors are taxes and the federal budget, you’re going to see more about consumer and gov’t expenditures since investment is affected more by interest rates, the domain of the Federal Reserve.
So imagine that gov’t spending is a drain that adds water to the bathtub -> Activity goes up
Taxes are the drain taking water out – > Activity goes down
To push GDP up, increase spending or decrease taxes = Bush’s stimulus package (think about how it has succeeded and how it has failed)
To push GDP down, decrease spending or increase taxes
To keep the economy constant, spending + investment must = taxes and savings
And Keynes’s major caveat was this: there is no guarantee that economic activity/employment will stabilize automatically at “full” employment. Once it is at equilibrium, any variation will cause inflation or unemployment (potentially both).
All these items are part of the so-called “Keynesian toolkit.”
WARNING: Do not get too theoretical with your judges if they don’t seem to be following you. Always try to use appropriate and clever figures of speech to stand in as symbols/explanations of complex ideas. This will save both explanation time and confusion. It will also be of rhetorical advantage.
Essentially, the economy is controlled by the gov’t with fiscal policy (what the topic is about) and by the Federal Reserve Bank with monetary policy (supply and interest rates).
HOW THIS APPLIES: Make sure you do not let your opponents get away with attributing anything to the gov’t budget that is actually caused by the Fed. Make sure you don’t make a mistake of it either.
Remember that economics is all about TRADE-OFFS and that you today are looking at what trade-offs occur between working on deficit reduction versus spending on programs.
What we’re considering are STRUCTURAL DEFICITS – deficits built into the budget, which can occur at full employment/activity because tax cuts are not matched by spending cuts. The real problem with these is that they eat up a large part of the savings that would have been invested, resulting in slower growth.
Economics in Plain English, Leonard Silk
4 major components of GNP (I’m sure you can figure out the difference between this and GDP):
consumer spending (increasing taxes may decrease this)
business outlays on investment and consumer outlays on housing (again with taxes)
gov’t spending (only one out of four!)
net exports
ABOUT SPEAKING STYLE NOW:
Signpost, signpost, signpost! Always be clear to your judges the order in which you will be addressing issues, whether you will be stating, elaborating on, clarifying your arguments, or refuting, responding to, examining your opponents’ contentions. And stick to the order you said you would be using!
Especially towards the end, SMILE, loosen up and project confidence. Your judges will be exhausted by the end of the round and not really listening – brighten up their mood with your obvious cheerfulness – not only will a well-timed joke or witty remark or just plain happy voice keep them awake, but it will also psych out your opponents. This is particularly important for the final focus. Do not spread yourself too thin, address the underlying key single or two clashes of the debate, pour on the rhetoric and charm. Let your partner do the systematic refutation in the summary. This is the time to sell your judges on not just what you’re selling but who is doing the selling.
