Reducing the National Deficit

Reducing the National Deficit

Many United States' citizens are unaware of the country's current financial state. Many assume that one of the world's wealthiest countries could never be in debt. This is untrue however, and, in fact, the country with the greatest income per capita is in major debt. This study will examine possible solutions to reducing the United States' national budget deficit.

Understanding the National Deficit

The amount of money that the United States government owes as of October 17, 2004 at 03:48:52 pm GMT was $7,435,016,998.21. The debt has increased by an average of $1.7 billion per day since September 30, 2003! From a more individual perspective, currently the United States population is roughly around 294,555,320. With this number of people, each U.S. citizen would have to pay $25,241.50, just to break even.

How did the U.S. arrive in such a state where the country owes so much money? The recent accumulated debt is due to war, economic recession, and inflation. The country has been in debt since 1790, when it assumed the Revolutionary War debts of the Continental Congress. At the end of that first year, the debt was around $75 million. Surprisingly, at one point the national debt was virtually zero, but in the midst of World War I, the debt rose to $1 billion in 1916. The debt peaked in 1919 at 26 billion dollars. The debt rose to this level solely because the United States needed to finance the war. Over the next ten years the debt slowly declined.

In 1930, during the early stages of the Great Depression, the debt jumped up from $16 billion to $42 billion. The Depression hurt the income flow, which the government had used to gradually decrease the debt accumulated for the previous World...

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... it, the current debt could be gone by the year 2015. There are, obviously, still drawbacks to this policy. For example, there would be no one to control the Treasury's spending, which could be detrimental to the U.S. government and the nation.

Recommendations

On average the United States spends $529 billion on foreign affairs that will never be able to return the money to the US government. Thus, it falls into the lost money category. If the government were to stop sending meaningless money in outlying areas that have no capital to return, the debt will be greatly reduced. Many of the solutions stated above are possible, but it is our recommendation that the U.S. government stop spending money overseas first. The country may still need to look into other solutions afterwards, but we believe this is a crucial first step to reducing the national deficit.