budget deficit Essay

The national deficit in 2015 was $435 billion, which means the U.S. government spent $435 billion more than it brought in. This consistent overspending has led to a debt of over $19 trillion dollars. When pondering these incomprehensible figures it is important to consider the causes that led to this financial dilemma, and the effects such a huge debt will have on society.

Overspending is a pertinent problem facing the lawmakers in Congress. In 2012 discretionary spending reached $1.3 trillion and mandatory spending $2 trillion, while only bringing in $2.5 trillion in revenue. Since the turn of the century back in 2000, non-mandatory spending by the government has topped out a whopping $16.1 trillion just in the past 13 years (Boccia, Frasser & Goff 2013). This persistent overspending on programs and services that are not necessary to the functionality of the country is what is causing the deficit to rise year after year. To remedy this issue the government must either increase the revenue it brings in through taxes and trade or reduce the amount of money it spend or perhaps even both. In 2012 thirty-one cents of every dollar that Washington spent was borrowed (Boccia, Frasser & Goff 2013). Most of which went to large programs such as Social Security and Medicare and if these large, growing programs, or just the budget in general, do not undergo financial reform it could spell disaster for the economy and fiscal state of the nation.

The debt ceiling debate really comes down to your individual view on fiscal economics. If a person follows the general conservative view they recognize the fact that a government can only spend as much as it takes in. A liberal point of view would see a country’s spending as a necessary part of keeping a functioning society, and that debt is a side affect of this process. If a country continues to build insurmountable debt, an individual or business is less likely to invest in that country’s bonds or economy in general because they may worry about whether they will be able to cash out and get their money. This depreciation in investor confidence could eventually lead to a drop in the country’s credit rating from the major financial institutions. A drop in credit rating for a country’s bonds shows an overall lack of stability for that country. A decrease in investments in bonds and stocks for a country can hurt GDP and eventually send the country into a recession due to the governments inability to run efficiently.

When World War II ended in 1949, the debt grew at a slow and steady pace for the next 20 years. When the Vietnam War began in the 1960's the debt accelerated sharply. Thanks to the growth of television and news media, growth of the deficit was widely publicized. For the first time, the American people were given access to what was going on with the nation's debt. When the Gulf War began the early 1990's, the national debt reached a trillion dollars for the first time. By the end of the Gulf War, the government decided to make amendments to fix the continuing problem with the deficit. Despite those promises to reduce spending, the debt is currently at it highest point ever.

Many believe the country's dramatic decent into debt began with a choice, not a crisis. In January of 2001, with the budget balanced, the Congressional Budget Office (CBO) forecast that the nation would have over a $2 trillion dollar surplus by 2010, enough money to pay off the entire national debt. In the years following 2001 political leaders chose to cut taxes, increase spending, and wage two wars solely with borrowed funds (Montgomery, 2011). Today the national debt is larger, as a percentage of the economy, than at any time in U.S. history except for the period shortly after World War II.

While the fear of government default is approaching, there are solutions to this problem. The first is raising the debt ceiling, this avoids default that results in government shutdown and effects state and local government by losing Medicaid, highway construction and lower tax collections (Cooper and Story). The debt ceiling allows Congress the influence over spending

Currently, the United States owes approximately $19 trillion in National Debt. It is owed to Mutual funds, pension funds, foreign governments, foreign investors, American investors and many others. From the year 1959 to 2015, the United States debt has gone up by around 7554% from the debt in 1959 starting at $285 billion. The debt itself has increased by around 9 trillion since Barack Obama has taken the Presidential office in 2009. Everything has been done to increase national debt, but nothing has been made to reduce the national debt.

Many Americans today are aware that the United States is in debt, however, some may not realize by how much. Currently, the United States National Debt is up to 18 trillion dollars and is steadily increasing. This is a serious problem for the U.S., especially for millennials, who are going to be the ones living and dealing with the debt left behind for them. Increased spending, borrowing from China, and interest on the money borrowed are setting up our economy for an eventual crash, one that the upcoming generation may not be prepared for. Every dollar that accumulates into the debt will have to be repaid with interest at some point, making it harder to pay back. To gain a better understanding of how the U.S. dug itself into such a deep hole, one should start at the beginning of where the debt started.

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

Government spending began to really grow around 2001. This was partly due to the 9/11 terrorist attack. Additionally, there has been an increase in spending with Social Security and Medicare. In response to

Debt.” 21). In other words, at least one-fifth of tax money did not bring US citizens any benefits. Besides, less capital is available for the federal government to invest in the

In the grandiose words of George Washington, we should “cherish public credit… [avoid] accumulation of debt”. Washington loathed debts, and did anything that he could to avoid debts. As you can observe in the current day, our debt can risen a huge amount over the last few centuries. On December 22nd, at 10:50 A.M, the United States was in debt by $19,944,078,298,000 and rising every second. For the US to be out of debt, each of the 325,166,983 citizens would need to pay $61,338 as of 10:52 A.M (12/22/16). This is insanity. Just 16 years ago, we only had $5.629 trillion in

Fixing the national debt is a coservercal issue within our government. Since the two parties have opposing views on how to fix it, it creates gridlock on the process of creating a plan to reduce it. (Perdue, 2015) Our federal government debt has extensively tripled since the year 2000 (see appendix A) (Historical Debt Outstanding Annual 2000-2015,2015), today our debt is a tad bit over nineteen billion. (U.S.NationalDebtClock.org , 2016) We have arrived at his point through the imbalance between revenues and spending, fueled by ever-high interest rates. Which will approximately result with us reaching ninety percent of GDP. (Greife, 2010) The government has no revenue. Therefore, the money it receives comes from the people and the

Criscitello (2013) raises some interesting points and certainly portrays our national debt rather accurately, “a debt blob” (p. 1). While finance is not a strength of mine, Criscitello’s (2013) ideas make sense as there certainly needs to more than two equally ominous options of increasing the ceiling or default. As such, his call for “budgetary restraint” from one budget year to the next seems feasible. Through my limited understanding of the debt ceiling issue, raising the ceiling does not allow for increased spending like a personal credit card, rather it provides a means for which it allows the US to meet its financial obligations. Failure to raise the ceiling does nothing but the world’s financial markets in chaos so it makes no sense

Throughout most of the country’s history, the United States’ federal government maintained a reasonable level of national debt. For example, the total national debt in 1981 was $998 billion. Since then, however, the government has generated significant budget deficits, and the level of debt has risen to $16.7 trillion in 2013 (Calleo, 39). Budget deficits are caused