Example Of Debt And Deficit Course Work

Published: 2021-07-05 12:45:05
essay essay

Category: Investment, Taxes, Debt, Politics, Government, Services, Deficit, Federal Deficit

Type of paper: Essay

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The US federal deficit and the debt are two inseparable problems facing the US since deficit spending began. There is some confusion between the two but the difference is quite simple. The deficit is the amount spending over the fiscal year exceeds the increase in revenue. If we bring in $10 and spend $15 there is a $5 deficit that has to be made up somewhere. It is either cut or funds are acquired elsewhere such as bonds or borrowing through other means. Over time this has a cumulative effect that is the debt which builds interest.

Fortunately since 2009 the federal deficit has been decreased significantly every year. Even at the lowest levels since 2008 having a deficit has a snowball effect. Every dollar spend through deficit spending increases the debt, which has to be serviced through payments on interest every year. For this fiscal year there will be about $225billion spent to service the national debt. This is enough money to fund all higher education loans, grants, tax benefits and work study. This could fund healthcare, VA benefits, small businesses, infrastructure, energy independence.
What makes things worse for our citizens isn’t just that the debt is owed and servicing the debt is expensive. Over $2trillion of the debt is owed to Social Security, which has made the program seem less solvent and a source of controversy for many years.

It seems to be a common statement that deficits don’t matter. In the short term this makes sense. Borrowing to avert financial collapse of the nation is a wise decision. If you are looking at disaster or borrowing, the choice is natural. The question is when borrowing becomes riskier than not having the extra expenditure and what programs can be cut to make up for the budget gap.

The problem is that for every expense there is a special interest group or a politician who is going to work as hard as he can to protect it. Eventually the service on the debt will take up too large of a percentage of GDP and things will have to change in a fundamental way to endure the government can continue to operate and provide vital services.

References

REPORTS. (2014, May 6). Government. Retrieved May 30, 2014, from http://www.treasurydirect.gov/govt/reports/ir/ir_expense.htm
Recent US Federal Deficit Numbers. (n.d.). US Federal Deficit Definition. Retrieved May 29, 2014, from http://www.usgovernmentspending.com/federal_deficit_chart.html
Weissmann, J. (2014, January 3). Here's Exactly How Much the Government Would Have to Spend to Make Public College Tuition-Free. The Atlantic. Retrieved May 30, 2014, from http://www.theatlantic.com/business/archive/2014/01/heres-exactly-how-much-the-government-would-have-to-spend-to-make-public-college-tuition-free/282803/

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