Italy : Public Debt Will Not Drop Despite Low Deficit

The U.S. national debt is very large at more than three-quarters the size of the economy—and growing federal spending, especially on entitlements, is quickly driving the debt to damaging levels. Federal spending was about 23 percent of the GDP in 2012—far above the historical average of 20.2 percent. It is projected to surge to nearly 36 percent in less than one generation. The government debt must be limited in some way or else our economy will face devastating consequences. The government debt has had its highs and lows throughout history in comparison to the GDP, and to reduce it, we must minimize spending on entitlements such as Social Security and Medicare.

The Conservative Republican approach to fiscal policy reduced debt held by the public to 72 percent of GDP, $3,280 billion short of the sustainable level.

Imaging yourself accepting you’re first credit card and immediately you begin to frivolously spend all the money your bank offers you. However, come to find out, you didn’t realize there was a consequence to your spending and now you are eagerly trying to pay back the money you owe with interest. Now take that scenario and apply it to our government spending in the United States. The author of “Going for Broke,” Michael Tanner, explains in his book the current financial crisis America is subjecting themselves to in the long run. Governmental officials of various political parties are turning blind eyes to the ever-increasing concern of stability in the United States. More of our taxing paying dollars are being used to chip away at an increasing debt that our government has no intent on fixing. The goal of this paper is to address Tanner’s issues with the growing economic deficit of the American people and its complacent government. Some questions Tanner emphasis on are: what can of debt does America have, where is the taxpayers' dollar being spent on, and what will happen to our economy if nothing is fixed?

According to recent analysis from the International Monetary Fund (IMF), in 2010, the UK is estimated to have had the fourth highest level of structural government borrowing amongst the 29 advanced economies for which comparable data are accessible. This structural government borrowing is one of the main underlying issues that the Budget, over the reign of this current government, will try to address. However, at least according to plans published so far, the UK is intending the fourth largest fiscal consolidation among this same group of countries and so by 2017 the IMF predicts that the UK will have a lower level of structural borrowing than many other advanced economies, being below the average in the Euro area and below the average among the G20 and G7 countries.

We have a long story of debt, but it seems no one has been able to make it better. If the debt is increasing over time, the government has a budget deficit. Charles C. Turner, et al, defines the deficit as spending that exceed a revenue (482). In history, basic deficit or debt was usually from over spending from a war and economic issues like a recession or depression. Then the government had a budget deficit almost every year “between 1970 and 1997,” but the tax cut and more spending on defense by President Reagan in 1981 added more growth to the deficit. Also, another cause is from reducing of productivity seem in the GDP and lower tax rate (tax cut) (483). Even when the government had some budget surplus, still, it could not cover the debt. In 2012, the debt grew “over $ 16 trillion,” (482-483) and has increased more in recent year plus “2.9 percent” of the budget deficit in 2016 (The 2016 Long Term Budget Outlook, 2). To manage the economic depression, sometime policymakers cut the taxes and increase spending again by putting more money into the private sectors (Turner, 483); therefore, government goes further with the budget unbalancing. There are several reasons that lower the tax rate will not reduce the budget deficit closer to a balance.

The large amount of debt would restrict policymakers’ ability to use tax and spending policies to respond to unexpected challenges, such as economic downturns or financial crises.

The current economic event on the increase in the National government debt has become of interest to the public and the decision makers. This paper looks at the economic event as per Stephen Dinan’s article in The Washington Times dated on June 16, 2015, in regards to the impact of the increasing national debt to the general economic growth in America. The proportion of the United States ' National debt is increasing in comparison to the National GDP. It is evident from the past years that the United States ' Treasury has been borrowing a lot of funds from its citizens and foreign investors to help fund wars promote the economic development of the country, and save the financial systems as well. This paper will explain and demonstrate an in-depth economic analysis of the USA National debt vital to cope up with this worrying trend in the economy.

These countries are now facing great recessions and austerity as a result of these debts. Because Italy, Belgium and Greece are experiencing fiscal correction, the battle is far from over. Many other members of the EU will need to build up their fiscal surplus to counterbalance the vast debt that has been accumulated. The EU is really no different that the U.S. in that it needs to place full attention on its crisis and correct the situation immediately. Europe has crumbled more than the U.S. has as a result of the crisis. Europe is more segregated than the U.S. and doesn’t offer the same stability for foreign investment than the U.S.

On the economic plane, the Debt-to-GDP ration is one of the main indicators of the health of the economy. This is the sum of the country’s federal debt compared to the Gross Domestic Product in %. A low Debt-to-GDP would show that the economy make many products and services and, therefore, the revenue is high enough to compensate the

The public debt of Italy is growing exponentially, hitting 5.8 percent in 2009. Its unemployment was over 9 percent last year and is expected to top 10.5 percent this year. Italy continues to struggle with budget deficits and a high public debt, which is at 2.6 percent and 105.9 percent

The Eurozone is facing a serious sovereign debt crisis. Several Eurozone member countries have high, potentially unsustainable levels of public debt. Three—Greece, Ireland, and Portugal—have borrowed money from other European countries and the International Monetary Fund (IMF) in order to avoid default. With the largest public debt and one of the largest budget deficits in the Eurozone, Greece is at the centre of the crisis. The crisis is a continuing interest to Congress due to the strong economic and political ties between the United States and Europe.

The European sovereign debt crisis, which made it difficult or impossible for some countries in the euro area to repay or re-finance their government debt without the assistance of third parties (Haidar, Jamal Ibrahim, 2012), had already badly hurt the economies in “PIIGS”, Portugal, Ireland, Italy, Greece and Spain. This financial contagion continues to spread throughout the euro area, and becomes a dangerous threat not only to European economy, but also to global economy.

This paper is concerned with the concepts of accountability; representation and control explain the euro debt crisis in detail. The author takes a deeper journey into the meaning of occurs of Euro sovereign debt crisis by use of definition of ARC to in-depth explain this issue. We propose further examination of the ARC relating to the Euro sovereign debt crisis in order to propose a prosperous and harmonious of Euro zone.

What is the European Debt Crisis? The European Debt Crisis is the failure of the Euro, a currency that ties seventeen European countries together. In this paper, I will be describing the cause and effect of the debt crisis along with what would happen if the European Union stayed with the economy they have. Then what I believe is the best solution to fixing the debt crisis.

In Figure 1, the 5-YR CDS shows high bp starting from late-2009 to late-2012 and a gradually decreasing trend starting from the late-2013. In Figure 2, it is observed that there is steady and significant increase in the percentage debt of total GDP in Portugal since 2009 compared with others. Besides, there is a slowdown of the increasing trend in the last two years.