Streamline Training & Documentation: National Budget Simulation

Thursday, June 14, 2007

National Budget Simulation

If you'd like to get a feel for the effects of various trade-offs in spending on the size of the US federal budget and budget deficit, you can experiment via the National Budget Simulation.

Anders Schneiderman and Nathan Newman introduced the simulation in 1995 when they were co-directors of UC-Berkeley's Center for Community Economic Research. Their aim was "to challenge the simple assumptions many people had about the national budget."

The 2006 version is sponsored by Agenda for Justice. Actually, there are two versions, a short version, in which spending categories are relatively broad, and a long version, which includes a finer breakdown of spending.

The simulation's designers

suggest that you do the simulations first without knowing [the various programs'] budgets. You may be surprised that cutting certain programs yield little revenue. This makes the simulation a bit more challenging since it tests whether your perception of where money goes in the budget matches the reality.

After you finish making whatever changes you like, the results of your handiwork are reported back to you, along with a graph showing the distribution of spending and tax expenditures in the main categories.¹

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¹ "What distinguishes a 'tax expenditure' from a general tax deduction is defined by the Joint Tax Commitee on Taxation as follows: 'Special tax provisions are referred to as tax expenditures because they are considered to be analogous to direct outlay programs...Tax expenditures are most similar to those direct spending programs which have no spending limits, and which [are] available as entitlements.' The tax expenditures in this simulation follow the official tax expenditure lists established by the Office of Management and Budget."

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Labels: Business acumen, Learning resources, Simulation

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