National Debt
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Sanders Poel Senior English 5th Hour Johr National Debt In Manhattan, the National Debt clock looms over citizens walking along the street. It broadcasts the billions of dollars owed by the US government. Just how much has the nation borrowed? The number increases by the second. The national debt affects all American citizens in many unseen ways, and it is an important issue to become informed on. America has a staggeringly high debt. According to the national debt clock, the United States owes approximately 15 trillion dollars. The most recent budget that has been passed by congress for this year has a deficit of more than 1 trillion dollars. Who owes money to who? A common misconception is that the government owes money to countries that it has borrowed from. However, this is only partly true. The United States government is payed for by United States tax payers. They also make money by selling bonds. Anyone can purchase a bond. It is through bond ownership that China “owns” a portion of the United States. Therefore, all American tax payers are indirectly in debt to all bond holders. Incremental budgeting is another issue that fits in with the national debt. It may seem like common sense to limit expenditures in order to pay off debt already outstanding. Yet congress not only regularly passes continuing resolutions, which allow programs to keep their previous year's funding, but they follow the idea of “incremental budgeting.” This idea states that all programs will receive a slightly higher budget every year. This is one of the ways that national debt has procured in the United States. Tax revenues stay relatively similar, while program expenditures continually rise. A major portion of the national debt involves social security. Nearly one third of the nation's spending is on this social welfare program that provides means for the elderly. Where did this system go wrong? Back in 1940, there were forty two workers paying into the system for every retiree that was withdrawing. Today, that ratio is at three to one. According to the government's social security website,
all workers can expect their income from social security to be about one third of what their salary was before retiring. Even with these cuts, social security remains our nation's largest amount of debt. Another major cause of national debt is that the government follows the Keynesian theory of economics. In a normal economy, there are periods of growth and periods of recession. According to the Keynesian theory of economics, the government should save money during economic booms. This limits economic growth during these times. The theory then states that the government should spend that saved money when the economy is in a downturn. This stimulates economic growth. Overall, by saving money during economic booms and spending in a downturn allows the government to keep the economy maintaining a steady rate of growth. The problem is that the government continually spends money during economic downturns, without saving during periods of growth. Why won't the government save money? The answer to this is the American people. While it would be wise for the government to set money aside in reserve funds for problems that may arise, the American people are completely against this idea. This stems from the fact that the government runs off of taxes collected from the citizens. If the government is going to collect taxes, it is thought to be only fair that the government spends all of that money that is collected. A common ideology is that if the government can afford to save money, than it can afford to run off of less taxes, and American citizens will lobby for lower taxes. Another way that citizens have caused the national debt is through entitlement programs. People are naturally selfish. In that sense, they consistently vote for representatives who promise more benefits to their social class. Politicians who get elected will try and fulfill their promises, and more entitlement programs are created. However, entitlement programs are not free. In order to fund programs, more money must be spent. As mentioned above, people are selfish, and do not want their taxes raised. This want for more entitlement programs without raising taxes causes the national debt to increase because the government is spending more money while their revenue stays the same. Our recent economic downturn is another cause of national debt. Through the recession,
unemployment has been a large problem. Since fewer people have steady jobs, the government is collecting less revenue in taxes. In turn, since more people are collecting unemployment, the government also has increased expenditures. This simple concept is a big factor in how much money the United States government owes. The affects of national debt are common and widespread. While most ignore the issue, it has a large impact on their lives. While much of it revolves around a lack of responsibility within the government, pressure from constituents also plays a role. It is an issue that could negatively alter the United States. National debt is a serious problem.
all workers can expect their income from social security to be about one third of what their salary was before retiring. Even with these cuts, social security remains our nation's largest amount of debt. Another major cause of national debt is that the government follows the Keynesian theory of economics. In a normal economy, there are periods of growth and periods of recession. According to the Keynesian theory of economics, the government should save money during economic booms. This limits economic growth during these times. The theory then states that the government should spend that saved money when the economy is in a downturn. This stimulates economic growth. Overall, by saving money during economic booms and spending in a downturn allows the government to keep the economy maintaining a steady rate of growth. The problem is that the government continually spends money during economic downturns, without saving during periods of growth. Why won't the government save money? The answer to this is the American people. While it would be wise for the government to set money aside in reserve funds for problems that may arise, the American people are completely against this idea. This stems from the fact that the government runs off of taxes collected from the citizens. If the government is going to collect taxes, it is thought to be only fair that the government spends all of that money that is collected. A common ideology is that if the government can afford to save money, than it can afford to run off of less taxes, and American citizens will lobby for lower taxes. Another way that citizens have caused the national debt is through entitlement programs. People are naturally selfish. In that sense, they consistently vote for representatives who promise more benefits to their social class. Politicians who get elected will try and fulfill their promises, and more entitlement programs are created. However, entitlement programs are not free. In order to fund programs, more money must be spent. As mentioned above, people are selfish, and do not want their taxes raised. This want for more entitlement programs without raising taxes causes the national debt to increase because the government is spending more money while their revenue stays the same. Our recent economic downturn is another cause of national debt. Through the recession,
unemployment has been a large problem. Since fewer people have steady jobs, the government is collecting less revenue in taxes. In turn, since more people are collecting unemployment, the government also has increased expenditures. This simple concept is a big factor in how much money the United States government owes. The affects of national debt are common and widespread. While most ignore the issue, it has a large impact on their lives. While much of it revolves around a lack of responsibility within the government, pressure from constituents also plays a role. It is an issue that could negatively alter the United States. National debt is a serious problem.
