I believe that to understand the problem of budget deficit we need to understand the concept of fiscal policy. The most important source of government revenue is taxes. Government collects taxes from individuals, corporations, firms, and etcetera. Other source of receipts can be profits of the state enterprises and the firms selling the goods and services. In the USA they are not so numerous, but in the Western Europe and in developing countries have a little bit greater value: in Venezuela, for example, the oil sector belongs to the state, and in the beginning of 80th years provided a huge share of budgetary receipts - 77 %. (2) If there are receipts that government gets from different sources, then there are expenditures that government has. It is obvious that if government spends more than receive, it causes budget deficit. In economy these two important concepts of spending and receiving are interdependent. Because deficit occurs when the State expenditures exceed receiving in concrete to year, the government should control this process. When there is not enough money in budget, government borrows money from all different countries. Finally, we encounter with more problems. It does not help us to get out of the debt. Theoretically, the government has to choices to solve this problem. One way is to decrease its spending, and second way is to increase collecting of tax. But in the real world of economy this or that way will not work. Why the budget deficit of the USA increases during all history of the country? In my opinion, on these questions there is the answer: military expenses, national defense, and war. These three are the biggest issues. During all history the USA had the most powerful army in the world. It looks like... ... middle of paper ... ...vernment has to think about, but whole society. Our generation will live in different world than our parents used to live. With debt increasing, the changes in whole country will increase to try to reduce debt. And it does not look changes will be better. Government will need more money from us, taxes will rise, and retirement age will be increased. It sounds pretty scary if we will have to work till 70. There is something to think about for what we should spend money on. Some of that spending has to be reduced, such as military expenses. The U.S.A already got the most powerful army in the world, so this money should be put in economy development. Government should focus on more efficient strategy to overcome national debt. I personally think the government should spend more money on education and job retraining which will help to support society well educated and
...hey are can cause national debt. This would lead to other countries to lose faith in the dollar resulting in loss or trade and investors. The dollar will be worth less and less if nation is in high debt. People will also be affected, when you have less money you spend and buy less due to increased prices which can causes problems in the economy such as a recession or worse a depression. Budget Deficit calls for the government to let cost exceed national income and use of monetary policy to jump start the economy. The government must be careful when choosing the best way to build the economy up. If the policies fail, they can lead the nation into many problems as stated above. This is why regulating money, trade, and the economy is an important part in government tasks. In the end, citizens want the best policy to promote the U.S. into a stabile and secure economy.
The US has been in and out of debt countless times throughout history, going as far back as the Civil War. However, debt did not become a truly relevant problem until much later, in the 1980s (Budget Deficits). Up to that point, large budget deficits were generally only allowed during wartime, but this pattern ended after the Great Depression. Roosevelt’s New Deal meant that the government spent much more than it previously did, even after the economy improved (Budget De...
In general, an increase in government spending and decrease in the collection of government taxes and other receipts, increases the debt held by the local government. Government taxes and receipts fluctuate annually, and are frequently less than government spending. In the past, the U.S. public debt has increased for the duration of wars and recessions. When the government consumes more than what it accumulates in taxes, there is a budget deficit and the government then borrows from the private sector or from foreign governments to protect their spending. The compilation of historical borrowing is what materializes the government debt.
This deficit has to do with having responsible leader who are willing to increase awareness and make beneficial changes in the nation. In my opinion, the federal debt is a serious threat to the US that must be politically address whenever possible. I believe that the candidates of the 2016 presidential election should make this issue one of the top priorities to discuss and to dictate a considerable amount of work to fix it. That is because the worse the federal debt is, the worse the future would be to the nation. Also, voters must be well educated about this issue in order to shape their decision in voting for the candidate that seems most powerful and confident about this problem. Solving this problem may be difficult and would take time and so much effort. Therefore, the changes and solution must be on both a national and individual levels as
Government spending is a controversial topic. Even though the government has a set budget each year that Congress and the President of the United States collaborate on, the United States continues to fall deeper in debt. According to U.S. National Debt, the U.S debt has been larger than our total annual gross domestic product since 2012. In other words, our debt is larger than the value of all the goods and services produced in the country within a twelve month period. “It is said that the U.S is currently $19.2 trillion dollars in debt (U.S. National Debt).” As long as Congress and the President continue to run yearly budget deficits, the U.S debt will continue to rise.
The U.S budget deficit over the years has been a problem but lately the deficit has shrunk. However, what made the U.S budget deficit get to where it is today and what will it be like in the years to come. Throughout the past the U.S has operated under a deficit. This means that the U.S Spent more money than it was taking in. The cause of the excess in spending was different depending on which year. Some of the causes were war, increase in spending , and economic downturns. There were different acts passed to try and control the deficit problem. The deficit at the present time is declining. This decline is due to the improving economy, sequester, and a tax increase on high-income households. The big factor that went into the decline in the deficit for 2013 was the payment that Fannie Mae and Freddie Mac made. The deficit decline in the present time may make some think the U.S could get out of debt but it has been projected that the U.S deficit will start to increase once again.
One way the government can reduce the deficit is by spending less. Americans are known for spending. Whether it is on necessities or just simple wants, money is thrown out. Most of the time, we spend more money than what we really have. When you spend more than ones income, it causes a big problem. This is the main cause of the federal deficit. America has been spending more than its actual income. Every year, nearly $200 billion are thrown away through fraud, waste, and mismanagement. A lot of money is spent on unnecessary programs such as NASA etc. The set budget for the year of 2014 is $17.6 billion (Congress approved). This is money that can be spent on better options such as education or simply paying off the budget. In order to reduce the amount of money owed, the US must spend less. Spending less will allow the economy to recover and possibly pay off its debt.
All but four countries in the world has external debt (“Country Comparison: Debt External”). Having a debt is almost as common as having a mortgage. Since its establishment, The United States has always been in debt (“Historical Debt Outstanding – Annual”). The US national debt has had five sharp increases previously in its history. The reasons include civil car and the two World W...
The Federal Budget Deficit is the amount of money that the government loses each year by spending more than they get back in taxes. The Federal Debt is the accumilation of the federal deficit over the years. Presidents Warren G. Harding and Calvin Coolidge are the onky presidents to ever reduce the federal debt. Today the federal debt is about $21.16 trillion dollars.
The concerns I have when talking about economics is the national debt crisis. There was a time when the United States was able to manage to keep a balanced budget. In fact, the only times a budget deficit existed were in times of war or other catastrophic events. The Government, for instance, generated deficits during the recession of 1837, the Civil War, the depression of the 1890s, and World War I. However, as soon as the war ended the deficit would be eliminated. When a government spends more than the revenue collected from taxation, tariff, and other fee revenues, the country must borrow money to cover the deficit it faces which when accumulated over the years becomes the national debt. In addition, there are two types of national debt, internal and external debt. Today the debate over the national debt crisis continues and many U.S. citizens are concerned about their financial future. Although, both the Democratic and Republican parties have their own opinions on how to fix this issue, a decision must be made to solve this issue before major repercussions.
It is undeniable that the USA has the greatest military power in the world. Mann (2004) demonstrates it persuasively: ’Its military budget for 2003 was 40 percent of the world’s total military spending, exceeding the spending of the next 24 states combined.’ Furthermore, Zakaria (2008) compares the USA and China: ’China has about 20 nuclear missiles that can reach the United States. We have 830 missiles, most with multiple warheads, that can reach China.’ These figures tell their own convincing story. Even during the Cold War the USA had such a superior military strenght that it did not take any other state (including USSR) as a serious security risk. (Cox 2001) After the Soviet Union collapsed it has even less powerful and threatning enemies, especially when its military budget is expanding while the military budgets of the most states are declining. (Mann 2004) However, the material preponderance of the USA’s military power does not make it an empire. For it to be an empire, it would have to be able to use its military pow...
Government spending has become a hot topic of debate after economic recession of 2008 but it’s still a controversy among the economists. Some economists favor role of government in the economy for balance of economic shocks, whereas others consider that government generate shocks and instability in economy. Keynes was first who introduced government involvement in economy after the recession of 1930. Theories of Keynes regarding the government spending have again taken attention in the financial crisis of 2008 in America, which has spread all over the world through trade openness. This financial crisis has decreased the economic growth and employment rate in whole world especially in the developed countries. Thus some economist suggests that
Alexander Hamilton once said, “a national debt, if not excessive, will be to us a national blessing.” The debt of the United States of America is by far excessive. As of April 27th 2014, at 7:45PM GMT, the estimated apparent debt is $17, 444, 8555, 980, 176.09; which makes each of the 318, 108, 108 citizens owe a portion of $54, 839.39 and demonstrates the daily increase in debt of $2.40 billion. Evidently, such a crisis did not arise over night. Numbers have steadily soared with the occasional dip and fluctuation. As for the deficit, the U.S. continues to spend more than it receives in revenue, adding to the cumulative debt. If the government continues expenditures in such increased amounts, the country will never eliminate its trillions upon trillions of debt.
Thomas Jefferson once stated, "I place economy among the first and most important virtues, and public debt as the greatest of dangers. To preserve our independence, we must not let our rulers load us with perpetual debt" (Bussing-Burks, 7). A lot has changed since Jefferson was President two hundred years ago, but the need to be financially solvent is something that will always be necessary for the United States to maintain its leadership position in the world. The United States of America currently owes $16.7 trillion in debt primarily as a result of the government’s spending practices during the last ten years. Two wars, several fiscal collapses, the bursting of the bubble in the housing market, looming medical care costs from an expanded healthcare access law, and a recession may be the scapegoats, but the real issue is fiscal irresponsibility by the parties in power (Hiber, 76). One idea that has been discussed not only in Congress, but also on prime time news networks is the passage of a Balanced Budget Amendment, which would require that Congress balances the country’s budget every fiscal year (American Government, 1). A Balanced Budget Amendment could provide an exception for times of war, national emergency, or recession, or allow the legislature to suspend the rule by a supermajority vote (Lee, 2). A balanced budget is critical because budget deficits can only be funded by additional increases in the level of the national debt, which can place an undue burden on future generations to repay such debt, create annual interest costs that consume an increasing portion of tax revenues and crowd out spending on current programs, and result in potential reliance on other countries in order to make financial ends meet.
According to askheritage.org the Washington Post reported that the national debt is no longer unsustainable. It seems like national debt is not government’s high priority anymore. However, there are plenty of reason why reducing the national debt should be the most urgent problem that the president and congress should address in 2017. The effect that the national debt can have on the economy is tremendously impactful. Cost of living will rise because the government will find a way to collect money by putting higher interest rate on anything from credit card from house mortgage. There will be a generational inequality because by not being responsible for the current generation’s debt, people are giving burden of reducing debt to our next generation which will threaten their standard of living and retirement plan. It cause slower wage growth. Instead of making productive investments, money goes to buying government debt. The debt have huge impacts on fiscal policy. Economicshelp.org defines fiscal policy as a policy involves the government changing the levels of taxation and government spending in order to influence Aggregate Demand (AD) and the level of economic activity. The federal debt cause reduction of fiscal flexibility. Between 2008 and 2013 the GDP increased from 35 percent to 70 percent due to the Great Recession. Because of high debt, our government is not