Debtpocalyse: Raising the debt ceiling or not? The debt limit or debt ceiling is the maximum amount of money the U.S. Treasury can borrow to meet its legal obligations which include Medicare/Medicaid benefits, Social security benefits, Military, interests on the national debt, tax refunds and some other payments. However, there have been some controversial about it among politicians whether Republicans or Democrats. Raising the debt ceiling has its drawbacks as well as its advantage and those in position to make decision should be cautious as the consequences can be very serious to the economy, to the American people, and possibly to the world economy. The federal budget of the United States provisioned more spending than revenue resulting …show more content…
Not raising the debt ceiling can have enormous consequences and surely government services would shut down. Interest rates would increase tremendously which would translate to a higher mortgage rates and borrowing costs for everyone including the government. The nation’s fiscal situation would worsen and the possibility of facing a market panic would be another scenario similar to the one in 2008. There have been some disagreements among the politicians about increasing the debt ceiling but those disagreements have caused government to briefly shut down in 2013 which curtailed most government routine operations. Approximately 800,000 federal employees were definitely furloughed and another 1.3 million were required to report to work without known payment dates. Meanwhile, some members of congress kept collecting their paychecks while some with a little bit of conscience gave up theirs. (Source: Wikipedia.org_United States federal government shutdown of 2013) In an article written by Kirsten Appleton and Veronica Strarqualursi (2014), “VA financial benefits were disrupted. Millions of veterans and their families almost did not receive their benefits. The Veterans Affairs secretary at the time, Eric Shinseki, warned that if the shutdown continued through late October, …show more content…
Peter Morici, an economist and business professor at the university of Maryland, and a national columnist stated, in an article published at the Washington times, that “The Treasury could easily refinance the existing federal debt — sell new federal government bonds to replace those that mature each month — if it keeps paying the interest on the total debt — $276 billion. It simply can’t add to the debt by selling even more bonds.” He further commented that “The bonds outstanding cover past spending. Raising the debt ceiling only permits Uncle Sam to spend more than it collects in taxes in the future. Essentially, if the federal bureaucracy is put on a diet and compelled to get along on the $3.5 trillion it collects in taxes, pays the interest on the debt and sends out in Social Security checks, it would have $2.2 trillion left to fund remaining planned spending of $2.8 trillion. Does anyone really believe the federal government, in a pinch, could not get along spending 21 percent less or that the United States of America would collapse if it tried?” He continues with his statement that “Curbing federal spending by that amount would require the president and the director of the Office of Management and Budget Mick Mulvaney to prioritize among obligations and planned new initiatives.” He also
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
...vailable for stimulus programs to boost the economy out of the 2008 financial crisis. This caused fewer jobs to be created, which meant less tax revenue and more debt.
If the government changes the way they spend the budget, then they can change the way our government is ran. According to document C we spend 83% of the budget on “The Big Five”, which are the five main categories in the budget.We need to take 10%
Federal spending is necessary for the economy and is essential to the accomplishment of national goals and advancement. This is why a budget is needed, however, there is no actual process mentioned in the Constitution that explains how Congress should do this. The Constitution states:
In order to run more efficiently, there are certain responsibilities that Congress has given to the President over time. But that doesn’t mean Congress is losing any power or authority. It just means that they are giving up a responsibility that they don’t need. One of these responsibilities that were given to the President is the raising and lowering of tariffs. When it came to this issue, Congress can’t act decisively on its own. So even though Congress appropriates funds, they gave the President this fiscal responsibility. Again I want to stress that they didn’t lose any authority or power because of this. All they lost was a responsibility that they no longer have to worry about as it’s the President’s responsibility now. Still, the president has no authority or power regarding this issue. However, when he was given this fiscal responsibility, Congress also gave him staff assistance in the form of the Bureau of the Budget. This department helps the President make up the budget he wants to propose.
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.
The preamble of the United State’s constitution sets many goals for the country. These goals are to form a more perfect union, to establish justice, insure domestic tranquility, provide for the common defense , promote the general welfare, and to secure the blessings of liberty for ourselves, and our posterity (US Const). With all of these goals it begs the question are, parts of the United State’s government meeting these goals? One specific case with this relationship is the relationship between the federal budget, and the goals in the preamble. The federal budget is meeting the goals set out in the preamble of the constitution because the federal budget defends the country, promotes the welfare of America’s citizen, and establishes justice
As of today America’s national debt is 18 trillion dollars and approximately 5 trillion of that is held by foreign countries including China and Japan. In the last few years we seem to hear more about balancing the country’s budget and politicians raising the debt ceiling so we can pay on this debt. How have we gotten into such an overwhelming and complicated problem with our nation’s money? Ironically the same can be said for our individual household debt as well as making the same mistakes and trying to find creative ways to be accountable to our financial responsibilities. Teaching the basics of personal finance n our schools can culturally change our financial practices, leading to a more financially literate public and a stronger, more stable, America. If the younger generations can become more financially savvy, then there is an opportunity for our nation as a whole to become less dependent on debt to survive.
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...
Deficit spending happens when a government grows its debt, meaning that its spending is greater than its income. Deficit Spending, 2008 Deficit spending is a fiscal policy, that when used appropriately can do some amazing things, like pull the United States up from its bootstraps effectively ending The Great Depression. President Hoover increased government spending by 50% and used the money to fund public works and infrastructure projects from 1928 to 1932. (Deficit Spending, 2008)
Throughout the years the U.S has had more budget deficits than it has had surpluses. This is due to the excess in spending and not enough revenues to pay for it. Many have debated over the U.S budget deficit problem. However to fix the problem one has to research the past to figure out how the U.S budget deficit got to where it is now. Hopefully by figuring out this, one could project what the U.S budget deficit will look like in years to come.
The Committee on Public Debt Policy. Our National Debt : Its History and Its Meaning Today.
The United States economy is racing ahead at dangerous speeds, and it may be too late to prevent the return of widespread inflation. Ideally the economy should move ahead gradually and grow at a steady manageable rate. Mae West once stated “Too much of a good thing can be wonderful” and it seems the U.S. Treasury Secretary agrees. The Secretary announced that due to our increasing surplus and booming economy, instead of having an outsized tax cut, we should use the surplus to further pay down the national debt. A tax cut, though most Americans would favor it initially, would prove counter productive. Cutting taxes would over stimulate an already raging economy, and enhance the possibilities of an increase in the rate of inflation. Paying off the national debt would actually help lower interest rates and boost investments, and therefore further increase the wealth of the population, while keeping inflation at bay.
One thing that I have learned about college is that you have to sometimes talk about things that make you uncomfortable or scared in order to learn. I do not think I am alone in saying that the United States’ current debt situation is terrifying. Ten trillion dollars alone is an expansive and unimaginable amount of money, and since PBS produced Ten Trillion and Counting in 2009, the national debt has grown to twenty-one trillion. As stated, the documentary was produced during the first months of former President Barack Obama’s first term and focused on former President George W. Bush’s relationship with national debt during his eight year tenure. Ten Trillion and Counting explains some of the questionable decisions that former President Bush made, especially regarding fiscal policy.
Veldhuis, Neil. “Beyond our means: Government debt tops $1.2-trillion and spending is still rising.” Financial Post. National Post, 16 May 2013. Web. 23 Feb. 2014.