Use wars of attrition to explain the debate about deficit ...

[xroflmao]

Use wars of attrition to explain the debate about deficit reduction.
 
  What will be an ideal response?

Question 2

Explain what a PAYGO rule is.
 
  What will be an ideal response?

[lkoler]

Answer to Question 1

When country is facing large budget deficits, both parties in congress want to reduce the deficit, but they disagree about the way to do it: One party wants to reduce deficits primarily through an increase in taxes; the other wants to reduce deficits primarily through a decrease in spending. Both parties may hold out on the hope that the other side will give in first. Only when debt has increased sufficiently, and it becomes urgent to reduce deficits, will one party give up. These situations are reffed as wars of attrition. The fights between Congress and the Obama administration on how to reduce the large deficits triggered by the crisis are mostly driven by disagreements on whether deficit reduction should be achieved mainly through spending cuts or mainly through tax increases.

Answer to Question 2

A PAYGO rule requires that any newly proposed government program will have no effect on either the current or future budget deficits. This implies that proponents of a new program must either propose tax increases to pay for the program or cuts in other programs.