Sunday, November 24, 2019
U.S. Debt Crisis Essay Example
U.S. Debt Crisis Essay Example U.S. Debt Crisis Essay U.S. Debt Crisis Essay Name: Course: Lecturer: Date: U.S. Debt Crisis As of September 2011, the US National debt was at almost $15 trillion. The national budget has grown tremendously over the years. Much of the spending in the national debt cannot be controlled. Social Security and Medicare and Medicaid account for more than 40% of the budget. The Medicare costs can be attributed to the fact that there is still a huge percentage of Ã¢â¬Ëbaby boomersÃ¢â¬â¢ in the country. Medicare pays 80% of insurance for people who are older than sixty-five years old and for the disabled. Defense takes up 20% of the budget, and 19% goes to discretionary spending. Other mandatory spending by the government is at 12%. The total spending by the government is more than $3 trillion dollars while the receipts amount to about $2 trillion dollars. This budget deficit continues to add to the national debt. The government needs to cut spending and it can do this is by cutting down defense, and discretionary spending. Foreign investors have invested heavily in the US by buying bonds and other market securities. More than 30% of the government receipts come from foreign investors. China and Japan have are the main foreign investors in the US, with a share of 40% of the foreign investment. Most of the countryÃ¢â¬â¢s money comes from Individual income taxes, which make up 42%. The government needs to find ways of increasing the countryÃ¢â¬â¢s income. Most of the government money can be collected from taxes, tariffs and other fees collected from businesses. It is however, interesting to note that only 3% of income is collected from excise and only 9% of the countryÃ¢â¬â¢s income come from corporate taxes. Whenever there is a deficit, the government usually borrows from the public. Intra government borrowing accounts for more than 40% of the government is borrowing. The government seems to be relying too much on the Social Security and Social Insurance, which contribute 40% of the countryÃ¢â¬â¢s income. It is borrowing from the Social Security and Social Insurance because there is a surplus in this area. The country has not been paying off its national debt over the years. This is clear from the fact that the debt has continued to increase. Different presidents have had an effect on the American economy. Although there was significant growth of the economy when Reagan was president, the national debt also grew tremendously over this period, increasing to 159%. The people did not care much about the national debt since the economy was growing, and so they never asked or got involved. The debt also increased tremendously when Bush was president. This can be attributed to the fact that he allocated a lot of money for defense and security, and most of this money was borrowed. President Obama has also increased the budget deficit. He was faced with the 2008 financial meltdown, which had a huge impact on the economy. He has put forward several measures to try to resolve the crisis. The legislators seem to be more interested in fighting and campaigning rather than solving the debt crisis. T he debt will continue to increase if the relevant authorities do not do something to decrease it. The government cannot continue to get its income from borrowing and it needs to find ways through which it can increase its revenue. It cannot continue to depend on foreign lenders since this already makes a huge percentage of the countryÃ¢â¬â¢s income. The best alternative for the country is reducing the amount it spends and increasing the revenue collected. The government cannot continue spending money it does not have. It needs to revise the Medicare and Medicaid programs and look for ways where it can cut some of the costs. Much of the money used in defense has gone to fighting terrorism. This is important for the country, but the government should consider ways of reducing these costs. The decision to move American troops from countries such as Iraq means that the government will spend less on them. The government should also consider raising the taxes progressively in such a way that the people do not feel burdened.