Balanced Budget Amendment

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As we discussed and read about this week in our class, the topic of the US Budget and how, why and what should we do about it has become a topic with many views and opinions. The United States of America currently holds over 16 Trillion dollars in debt based on our governments spending practices for the last ten years. Two wars, numerous fiscal collapses and cliffs, a bubble popped housing market, looming medical care costs from a socialized healthcare law and a recession have caused the government to acquire enormous amounts of debt. This debt with caused by what seems to be from irresponsible spending on both the Legislative and the Executive Branches have done nothing to lessen this deficit. One idea that has been discussed not only in…show more content…
Proponents of these amendments also that running deficits over the long term or persistent deficits can be dangerous as well. When the government runs persistent deficits , a increasing portion of consumer 's savings is used to purchase government debt instead of being invested in private capital goods . This is called “crowding out”, and this effect lower output and incomes in the future. Growing Federal Debt can lead to a sudden fiscal crisis in and of itself. This type of crises can occur when debt levels become so large in relation to the economy 's output that the government has difficulty selling it. Current and potential bondholders lose confidence with the governments ability to repay its debt and refuse to buy anymore. The government is then forced purchase new debt at higher interest rates, often leading to inflation, reduction in government services and programs and increased economic hardship on its citizens. There are several good examples of this type of debt crisis in Argentina, Mexico and Greece. The US saw a version of this in 2011, when S&P concerned with the US climbing debt and its credit worthiness reduced its credit rating or the ability of the country to borrow money at lower interests rates.
A federal Balanced Budget amendment based loosely on those instituted by the States of this country has many benefits. One such advantage
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