President Bush and his spokesmen continue to express the hope that the Federal budget can be balanced using the ''flexible freeze'' approach that he outlined during his campaign. But at the same time they have shown no inclination to retreat from their commitments to leave Social Security untouched, keep real defense spending constant, and not raise taxes.
Unfortunately, while the flexible freeze may have gulled some voters into thinking that candidate Bush had a painless, taxless trick up his sleeve for reducing the budget deficit, it is little more than a rhetorical flourish.
What is critical to understand about the flexible freeze proposal is that real spending levels will not necessarily remain stable. With a growing population, there will be more beneficiaries of almost every Government program next year than there are this year.
Furthermore, many of the goods and services the Government buys, medical care and weapons, for example, have costs that normally rise faster than the overall rate of inflation. Hence, implementing the flexible freeze will require significant cutbacks in existing programs even if no new initiatives are undertaken.
How large will the necessary adjustments be? This all depends on the level of economic growth and the rate of interest the Government has to pay on its debt. In its budget plans, the Bush Administration appears likely to embrace the extraordinarily optimistic economic assumptions used by the Reagan Administration in its final budget submission.Continue reading the main story
Not only do these Government forecasts assume that there will be no recession over the next five years, they also assume that growth will continue at an average annual rate of 3.2 percent rather than the 2.5 percent assumed by most other forecasters. The Administration also assumes that inflation will decline below the 2 percent level by 1994, and that Treasury bill rates will decline to 3 percent. As current long-term interest rates in the 9 percent range attest, market participants do not take these forecasts seriously.
Could a flexible freeze work with more reasonable economic assumptions? The recent budget estimates of the Congressional Budget Office suggest not. These estimates forecast a budget deficit of $155 billion next year and then a slow decline until the deficit reaches $122 billion in 1994.
And if Social Security is not touched, interest payments are not reduced and defense is kept constant, the $122 billion deficit in 1994 would mean about a 20 percent reduction in the rest of the budget. This means that everything from the National Science Foundation to Medicare and even the Federal Bureau of Investigation would have to have cuts. Cuts of this magnitude are not politically realistic for the very good reason that they would hurt those who have already suffered most during the Reagan years, and interfere with public investments needed if we are to restore the competitiveness of our economy.
Increasingly, those weary of the budget deficit debates are starting to insist that we may not really need to move toward a balanced budget. We have been lucky so far. But toughing it out, and reducing budget deficits only with optimistic forecasts and accounting tricks, is a dangerous game. At a minimum, it means that the United States will continue to consume more than 97 cents out of every dollar we earn, forcing us either to continue borrowing heavily from abroad or to cut back even further than we already have on new investment in productivity-enhancing plant and equipment. When our average trading partner saves at a rate nearly four times as great as ours, it is little wonder that we find ourselves increasingly ill-equipped to meet the challenge of the future.
There is an additional risk. Speculative markets are notoriously volatile, and participants may at some point conclude that our current course is unsustainable. If and when they come to this view, they will rush to get out of American assets just as equity owners rushed to sell their stocks in October 1987. The result will be a plunging dollar and an interest rate spike.
In the face of such a shock, the Federal Reserve's hands will be tied. Tighter money would push interest rates up even further, increasing financial distress. Looser money would push the dollar down even further, risking a major increase in inflation. Nobody can predict when or if a panic will come. But the risks will be reduced if market participants see a credible multi-year budget plan put into place.
Budget deficits are not an alternative to painful spending cuts or tax increases. In the end, the Government must pay for everything it buys. These warnings may be wearisome, but one must remember that in the end, the wolf ate the boy. It's time to discard the premises of the flexible freeze and get serious about reducing the budget deficit.Continue reading the main story
The passage discusses the feasibility of the "flexible freeze" approach proposed by President Bush for balancing the federal budget, highlighting the economic assumptions and potential consequences of this strategy. It includes a specific numerical example regarding the budget deficit and required cuts.
single_question_with_answer

the text contains a specific mathematical question about the size of budget cuts required if the flexible freeze is implemented with more realistic economic assumptions. the answer is provided, indicating that a 20 percent reduction in the rest of the budget would be necessary to address the $122 billion deficit in 1994, assuming social security, interest payments, and defense spending remain constant.
Given a text passage, determine:
    1. If it contains a mathematical question (including word problems or calculations)
    2. If an answer to that mathematical question is provided in the text

First, describe the content structure you found in 1-2 sentences.

Then provide your analysis in the following format:
TYPE: <one of the following values>
- NO_QUESTION
- SINGLE_QUESTION
- SINGLE_QUESTION_WITH_ANSWER
- MULTIPLE_QUESTIONS
- MULTIPLE_QUESTIONS_WITH_ANSWERS
system
President Bush and his spokesmen continue to express the hope that the Federal budget can be balanced using the ''flexible freeze'' approach that he outlined during his campaign. But at the same time they have shown no inclination to retreat from their commitments to leave Social Security untouched, keep real defense spending constant, and not raise taxes.
Unfortunately, while the flexible freeze may have gulled some voters into thinking that candidate Bush had a painless, taxless trick up his sleeve for reducing the budget deficit, it is little more than a rhetorical flourish.
What is critical to understand about the flexible freeze proposal is that real spending levels will not necessarily remain stable. With a growing population, there will be more beneficiaries of almost every Government program next year than there are this year.
Furthermore, many of the goods and services the Government buys, medical care and weapons, for example, have costs that normally rise faster than the overall rate of inflation. Hence, implementing the flexible freeze will require significant cutbacks in existing programs even if no new initiatives are undertaken.
How large will the necessary adjustments be? This all depends on the level of economic growth and the rate of interest the Government has to pay on its debt. In its budget plans, the Bush Administration appears likely to embrace the extraordinarily optimistic economic assumptions used by the Reagan Administration in its final budget submission.Continue reading the main story
Not only do these Government forecasts assume that there will be no recession over the next five years, they also assume that growth will continue at an average annual rate of 3.2 percent rather than the 2.5 percent assumed by most other forecasters. The Administration also assumes that inflation will decline below the 2 percent level by 1994, and that Treasury bill rates will decline to 3 percent. As current long-term interest rates in the 9 percent range attest, market participants do not take these forecasts seriously.
Could a flexible freeze work with more reasonable economic assumptions? The recent budget estimates of the Congressional Budget Office suggest not. These estimates forecast a budget deficit of $155 billion next year and then a slow decline until the deficit reaches $122 billion in 1994.
And if Social Security is not touched, interest payments are not reduced and defense is kept constant, the $122 billion deficit in 1994 would mean about a 20 percent reduction in the rest of the budget. This means that everything from the National Science Foundation to Medicare and even the Federal Bureau of Investigation would have to have cuts. Cuts of this magnitude are not politically realistic for the very good reason that they would hurt those who have already suffered most during the Reagan years, and interfere with public investments needed if we are to restore the competitiveness of our economy.
Increasingly, those weary of the budget deficit debates are starting to insist that we may not really need to move toward a balanced budget. We have been lucky so far. But toughing it out, and reducing budget deficits only with optimistic forecasts and accounting tricks, is a dangerous game. At a minimum, it means that the United States will continue to consume more than 97 cents out of every dollar we earn, forcing us either to continue borrowing heavily from abroad or to cut back even further than we already have on new investment in productivity-enhancing plant and equipment. When our average trading partner saves at a rate nearly four times as great as ours, it is little wonder that we find ourselves increasingly ill-equipped to meet the challenge of the future.
There is an additional risk. Speculative markets are notoriously volatile, and participants may at some point conclude that our current course is unsustainable. If and when they come to this view, they will rush to get out of American assets just as equity owners rushed to sell their stocks in October 1987. The result will be a plunging dollar and an interest rate spike.
In the face of such a shock, the Federal Reserve's hands will be tied. Tighter money would push interest rates up even further, increasing financial distress. Looser money would push the dollar down even further, risking a major increase in inflation. Nobody can predict when or if a panic will come. But the risks will be reduced if market participants see a credible multi-year budget plan put into place.
Budget deficits are not an alternative to painful spending cuts or tax increases. In the end, the Government must pay for everything it buys. These warnings may be wearisome, but one must remember that in the end, the wolf ate the boy. It's time to discard the premises of the flexible freeze and get serious about reducing the budget deficit.Continue reading the main story
user
The passage discusses the feasibility of the "flexible freeze" approach proposed by President Bush for balancing the federal budget, highlighting the economic assumptions and potential consequences of this strategy. It includes a specific numerical example regarding the budget deficit and required cuts.

TYPE: SINGLE_QUESTION_WITH_ANSWER

The text contains a specific mathematical question about the size of budget cuts required if the flexible freeze is implemented with more realistic economic assumptions. The answer is provided, indicating that a 20 percent reduction in the rest of the budget would be necessary to address the $122 billion deficit in 1994, assuming Social Security, interest payments, and defense spending remain constant.