By 2011, many countries had experienced an escalation in deficits and debt. It seemed that some might have not been able to service their debts, and perhaps to the default values. The United States has a budget crisis, the “left-liberal” Democrats wanted to raise taxes on the rich, while “right-wing conservative” Republicans want to cut spending. A philosophical divide on the role of personal responsibility towards the role of government existed. In the European Union, the “PIIGS” – Portugal … Read more »

By 2011, many countries had experienced an escalation in deficits and debt. It seemed that some might have not been able to service their debts, and perhaps to the default values. The United States has a budget crisis, the “left-liberal” Democrats wanted to raise taxes on the rich, while “right-wing conservative” Republicans want to cut spending. A philosophical divide on the role of personal responsibility towards the role of government existed. In the European Union, the “PIIGS” – seemed on the brink of insolvency, and the other members of the euro zone creates new loan programs to help them in their budget crisis – Portugal, Italy, Ireland, Greece and Spain. However, these loans contain a requirement to move towards balanced budgets. The citizens of the borrowing nations objected to the heavy tax increases and spending cuts, while the citizens of the successful nations asked why they should have to pay. It was not clear who will bear the burden of reducing the deficit and debt.
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from
David W. Conklin,
Danielle Cadieux
3 pages.
Release Date: 16 August 2011. Prod #: W11274-PDF-ENG
Budget Crisis: Who would bear the burden of reducing the deficit and debt? HBR case solution

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