In the year two thousand and nine financial years, the three trillion budget was released by the administration on Monday the fifth. It involved a cut in the budget where the Domestic program planned for the highest cuts in communities and families that are needy. This included aid in reduced income energy at home, a 10% cut in local governments and state discretionary grants, assistance in child care, housing vouchers, and block grants in community development (Lynn M. Stuter).
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However, the two thousand and nine fiscal budget proposed an additional seventy billion dollars in spending that are related to war, on one hundred and two-point four billion dollars to which is being pursued by the administration for two thousand and eight fiscal years. the requested amount in two thousand and nine fiscal years is just place holding for the beginning few months of the coming fiscal year, hugely underestimating the needed amount to proceed with the Iraq war. The administration aims to look for funds in spring to add to this fiscal year. Thus, the war in Iraq has made the United States budget twenty-twopercent billion dollars.
The budget of the military of non-war had an increment of about five present over fiscal year two thousand and eight making the amount five hundred and forty-oneforty one billion dollars which includes nuclear weapons funding under energy department funding.
Permanent tax subsidies were directed towards the wealthier individuals as put forward in the year two thousand and one and 2003 (Elliot, Brownlee, pp 110). Spending on the Military and tax cuts combined lead to large deficits of four hundred & seven billion dollars and four hundred billion dollars in the year two thousand and eight financial periods.
Medicaid budget cuts reduced the funding by seventeen point four billion dollars in the coming 5 years. Increased savings are got from federal Medicaid reductions by transferring costs to the states from the federal government. For instance, the costs of nursing home premises inspection are not abolished but it gets an increment shared by the government.
Other cuts involved energy assistance to help households with low income in payment of heating bills, block grants of community development aiding populations of low income in the provision of housing as well as economic opportunities, grants of the state as well as tribal assistance aiding in implementing standards of water and air, improvement in school programs funds and eradication drugs school programs and food program for commodity supplemental which gives nutritional food to elderly of low income.
Fiscal problems in States came at the moment the States is dealing with struggles to get a balanced requirement in the budget with depressed revenues to increase in service need and loss of jobs and income for residents. These cuts are affecting women who are pregnant, the old, domestic violence victims, and the poor and families with low income. In the next financial year starting July first, the gaps in the budget are being faced off by half. The time when the economy is down, while states are being faced with a lack of ability to provide to the residents’ good services due to their balanced budget needs, fiscal assistance should be provided by the federal government to states instead of cutting federal funding thus worsening fiscal crisis in states.
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The tax cuts though, came at extremely hard times when various states have their programs cut to get their budget balanced while about half the states are facing budget gaps of higher than thirty-four billion dollars for the next fiscal year. In addition, States may encounter significant revenue losses due to changes in federal tax as proposed earlier (Elliot, Brownlee, pp 124). This is because various states utilize federal income definitions, depreciation allowances, and tax codes as grounds for taxation. Tax incentives in business may cause revenue reductions of two point nine billion dollars in thirty-six states.
Elliot, Brownlee. Federal taxation in America: A short history. Cambridge University Press, 2004.
Lynn M. Stuter. What federal discretionary grants mean for your state. NewsWithViews.com, 2003.