The purpose of this paper is to discuss the short- and long-term effects of current budget deficits and the nation debt. In order to do this; I first had to find out exactly what they were. I will also discuss whether I think the government should operate with a balanced budget.
Budget deficit is the amount by which total government spending is more than government income during a specified period; the amount of money which the government has to raise by borrowing or currency emission in order to make up for the shortfall in tax revenues.
National debt denotes the total sum of the outstanding debt obligations of a country's central government. I discovered that many people use the term somewhat more broadly to refer to the total indebtedness of all levels of government, including regional and local governments and sometimes also the indebtedness of government owned business entities such as local transit and communications systems or nationalized industries as well. The national debt represents the accumulated total of all the government budget deficits of past years, less the accumulated total of all the government budget surpluses of past years. In the United States, the national debt consists almost entirely of interest-bearing "IOU" instruments that are usually re-sellable on organized financial markets such as, for example, U.S. bonds, U.S. treasury notes, and U.S. treasury bills. These IOUs are originally purchased from the Treasury by private individuals, private corporations, insurance companies, pension funds and banks (both inside the United States and outside its borders), and the Treasury then uses the money it raised to bridge its spending gap when its budget is in deficit. The Treasury also sells IOUs to other Federal agencies that operate so-called trust funds -- primarily the Social Security Administration and other Federal retirement programs. The complication here is that since this is money that the government "owes to itself," it is not counted as part of the national debt in any realistic system of accounting. I find this to be really strange. Money to pay the annual interest owed to the owners of the government's debt instruments has to be provided through appropriations in every year's Federal budget. These interest payments on the national debt constitute as one of the largest spending categories in the budget.
Gross Domestic Product (GDP) is an estimate of the total money value of the entire final goods and services produced in a given one-year period using the factors of production located within a particular country's borders.
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.
The federal deficit refers to the difference between all the amount the government attains from taxes plus receipts (other revenues) and the outlays (the cash the government spends). On its part, the national debt refers to the overall debt as a result of accrued deficits in addition to the accrued off-budget surpluses. The national government with regards to on-budget deficits can borrow money by offering treasury securities to the public, which then adds to the total debt.
In early May, the 2016-17 federal budget was released, outlining the government’s proposed plans for revenue and expenditure as well as the fiscal policies that will be initiated in the following financial year. Currently, Australia is experiencing a deficit of $39.9 billion, however the government plans to reduce the deficit to $37.1 billion by 2017 by implementing the plans listed in the federal budget, which will cause the economy to become more efficient and grow faster in the long term. The budget also outlines the government's concern on certain issues and the areas of the economy that needs improvement. Disagreements over the federal budget have raised arguments for and against the governments proposed plans. The main areas that have
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.
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.
Since the early 1970’s, Americans have had trouble controlling a huge money issue. The United States government has engaged in deficit spending. This occurs when spending exceeds the amount of income taken in (“Budget”). American politics have been trying to come up with ideas that the government can implement to fix our current deficit issue. Some strategies that the government may use are spending less, collecting more taxes, and balancing trade (“Atkins”). The federal deficit has become a big issue and Americans must try everything to reduce the debt. We must come up with a plan that will strive for a balanced budget.
Government spending is a highly debated topic as to how much money should be spent and how it should be spent, but the fact remains government spending is rising each year and will become unsustainable in the future without major changes. Government spending is currently around 40% of GDP as compared to 7% at the start of the twentieth century (Chantrill, NP). Government spending has had ebbs and flows that can be traced since the start of the twentieth century, which include two world wars and a great depression. However, from the 1980’s through the early 2000’s government spending was lower to mid 30% range of GDP (Chantrill, NP). Increase in spending has been seen since the stock market crash of 2008, to the current levels of around 40% of GDP (Chantrill, NP). Various reasons are behind the major increases of government spending, but the “...
There are different types of debt, although they all contribute towards the country’s status just the same. One of the most common types of debt Americans have is personal debt. This type of debt is the result of purchasing assets with values that diminish over time. Said assets include: new cars, clothes, furniture, and credit card purchases – short-term pleasures. Investment debt, however, is one of the more acceptable types of debt. This kind of debt results from borrowing to fund companies, education, or even homes – assets that will likely increase in value over time. Of course, both types of debts are equally difficult to repay. Debt ranges from mortgage payments, ca...
The federal budget is known as the notorious economic tank from which money is distributed to various programs. The money used every fiscal year, which begins October 1st and ends September 30th the next year, belongs to the people. The government raises this money through taxes and they spend it on national defense, Medicare, and social security. The federal budget is an exercise in making choices, and those options will certainly affect individuals living in the U.S. These choices cause debt to pile up on the government, who is struggling to make it disappear. The deficit and debt of a government gauges how well it is being run and how well it has been run in the past. According to The Economist the national debt is the total outstanding borrowing of a country’s government; it is an accumulation of deficits that has yet to be paid off (Economist, A-Z). The current U.S. federal deficit, as of the 2013 fiscal year, is a monumental $680 billion dollars, adding to an even higher debt. Any attempt to diminish this debt has the consumer footing the bill, but there has to be a different way. There have been requests to increase taxes, to raise revenues for transportation infrastructure, to restrategize the military force or to make defense more affordable (“15 Ways to Rethink the Federal Budget”, Brookings).
Deficit spending occurs when a government's spending exceeds its revenue, creating a debt balance. Deficits are usually measured over a period of one year, a fiscal year. Deficit spending is the same situation as if a person were to spend more than what they have in their bank account, creating a debt. Deficit spending can have positive benefits and negative benefits on an economy.
An article written by Daniel L Thornton states the United States has currently surpassed 100 percent of its gross domestic product. A significant amount of this debt is the result of the government’s effort to decrease the effects of the financial crisis. Until recently, large economic deficits have been linked to historic wars: War of 1812, the Civil War, World Wars I and II. The only historic peace-time economic deficit occurred during the Great Depression, when the deficit hit a peak of 6.6% of Gross Domestic Product (Thornton, 2012). In comparison, the deficits for 2009, 2010, and 2011 are all 8.9% or larger, far more than the previously largest single-year peace-time deficit. After each of these periods of large deficits, the budget ran
Gross Domestic Product (GDP) is the total value of final goods and services produced within a country's borders in a year.
Deficit spending results when a government decides to spend an excess of what they are bringing in. A government may do this for numerous reasons. Deficit spending has both economic advantages and disadvantages. A government must weigh carefully these advantages and disadvantages before deciding to deficit spend to achieve the desired result. Another way of looking at deficit spending is
Gross Domestic Product (GDP) is the monetary value of all finished goods and services produced and provided within a country in a specific time period. It includes all of private and public consumption, government spending, investments and exports less imports that occur within an exact country (Begg & Ward, 2013).