Essay Sample on Rising Federal Deficit and National Debt

Introduction

The federal deficit and the national debt of the United States have been increasing over the years. The deficit comes with various consequences that include reduced public investment. The government struggles to meet its expenses; therefore, it uses fewer resources on public investments (Woo, and Manmohan, 720). The government is also forced to hike taxes and interest rates to earn more money that it can use to fix the deficit and the national debt. There is reduced savings since people are taxed more.

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The lion share of the debt is borrowed from Asian countries; therefore, the people need to be worried of what will happen in case the government faces challenges in repaying the loans (Fastenrath, 280). There are incidences where Asian countries have sold property belonging to countries that were unable to repay the loans. The federal government needs to borrow loans that it can be able to repay to avoid scenarios where its properties are sold to repay the loans.

American citizens need to be concerned about the rising deficit and increasing national debt. The consequences of the deficit and the national debt will influence the lives of the people. The US deficit and the national debt has been increasing over the years; therefore, the curve will take time to change (Bourne). The people should be concerned with the measures that the state is putting in place to ensure it fixes the debt challenge.

The government borrows money from both foreign countries especially Asian countries as well as from the American people through treasury bonds (Sutherland, 152). Whenever the government requires money, they borrow from the stakeholders. Whom the government owes money is a concern to the people since it influences the terms of borrowing. The state should be concerned about the consequences of failure to follow the borrowing terms. One of the reasons why the citizens should concern is because the size of the deficit and the national debt impairs the ability of the government to respond to problems facing the citizens. This is because the government might not be having money to respond to problems such as in healthcare as they will be dealing with repaying the debt which is already huge and the interests are high. The deficit also has an impact on programs such as unemployment and food stamps because the government does not have enough money or expenditure. Also, when the government has a large amount of debt it has decreased savings, as well as the national income since most of the money they get, they will be channeled to loan repayment.

The best way that the government can reduce the deficit numbers is by putting up measures that will improve the economy of the United States. When the economy improves, the government will earn interest that it will use to pay the debt and reduce the deficit (Bourne). The taxes earned when the economy improves since more companies will come up. The goods produced by new companies will be exported hence reducing the deficit. The state also needs to reconsider some of the ways that it spends its resources in with the intention of cutting down expenses (Irwin, 720). The government wastes some of the funds in projects that are not beneficial to the people. Such projects need to be halted and the money used for other projects that are important hence saving resources.

Works Cited

Bourne, Ryan. "US Only Country with Projected Rising Government Debt to GDP Ratio Through 2023". Cato Institute, 2018, https://www.cato.org/blog/us-only-country-projected-rising-government-debt-gdp-ratio-through-2023. Accessed 16 Feb 2019.

Sutherland, Alan. "Fiscal crises and aggregate demand: can high public debt reverse the effects of fiscal policy?." Journal of public economics 65.2 (2017): 147-162.

Woo, Jaejoon, and Manmohan S. Kumar. "Public debt and growth." Economica 82.328 (2015): 705-739.

Irwin, Timothy C. "Defining the government's debt and deficit." Journal of Economic Surveys 29.4 (2015): 711-732.

Fastenrath, Florian, Michael Schwan, and Christine Trampusch. "Where states and markets meet: the financialization of sovereign debt management." New political economy 22.3 (2017): 273-293.