US Economic Essay Example

1. The Bush tax cuts

In 2001 and 2003, according to Associate press, George W. Bush government cut down the taxes which added estimation of $1.6 trillion to the foreign debt. According to Brian Beutler, Bush-era policies, specifically debt-financed tax cuts contributed to the vast portion of the challenge which over the years has gone to higher levels today.

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The solution to the debt catastrophe is politically tricky but economically secure. First, the federal government should agree to cut expenditure and elevate taxes to an equivalent amount. Each will minimize the discrepancy correspondingly though they have distinct impressions on financial growth and the creation of employment creation. Whatever decided on should make it clear exactly what will happen. This will reestablish confidence. That permits companies to put the expectations into their effective plans.

Another solution is to delay any variations for a minimum duration of one year after a collapse. This permits the budget to recover sufficiently to grow the 4 to 5percentage required to generate employment. That will produce the desired increase in Growth Domestic Product to conditions whichever tax escalations and expenditure slashed. That will lessen the debt-to-Growth Domestic Product ratio adequate to end any debt predicament,(Gordon, 2012).

2. The healthcare entitlements and Medicare prescription drug benefit

According to the majority of American, they persistently harp about Bush tax cuts. During Bush era, the spending of the federal government rose from $900 billion to $1.1 trillion deficit more than required by inflation as a result of added Medicaid, bureaucracy and regulations; later this was contributed to the health-enticement explosion which accounted for almost 100% of the national debt obstacle.

Additional prescription of Medicare drug benefit by George W. Bush is another factor blamed on the enormous federal debt. According to the AP, this added to the deficit almost $300 billion. Escalating entitlements resembling Medicare and health care initiative was another specific attractive package for the Congress to deal with the debt since they did not map out revenue strategies to fund those reimbursements.

On medical care expenditure, the federal government should you to increase the retirement age among its citizens. The public pensions are one of the significant zones of state spending. In the United States, pension spending has risen to just below $160bn - more than a 100% increase in recent past. When federal government set up these pensions, life-expectancy was considerably worse. With increasing life expectancy, the central government is committed to reimbursing additional allowances than former developers anticipated. Retirement pension is now the lone primary chunk of public expenditure. Increasing the retirement age also has the further advantage of levitation of output and growing the magnitude of the work-force. It is a way to cut expenditure obligations without any financial expenditure (Worrell, 2015).

3. The wars in Iraq and Afghanistan

During Iraq and Afghanistan wars, the national debt rose to $1.3 trillion; this was another significant segment of current, unforeseen expenditure over the last period. The battles were very costly to the federal government and had to get financed through borrowings which summed up to the national debt.

The federal government should avoid war expenditure or in other words, reduce the same. Afore will help to reduce the growing national debt. The conspicuous feature of us national debt history is the effect of war on triggering a burst of debt. The leading wars in Iraq and Afghanistan made the nation to spend a lot of funds. After withdrawing from the war, it has at least reduce stabilized spending in wars. The recent rise in debt is uncommon in being caused by primarily non-military influences.

In 2011, the government hindered approval of the financial year 2011 budget, practically triggering a general government cessation. Republicans complained to the $1.3 trillion deficit, the third utmost in history. To decrease the deficit, Congress recommended a $1.7 billion cut in security expenditure to overlap with the end of the Iraq War.

4. The Great Recession

Some of the expenditure gaps came from influences of the external mechanism of Congress and the White House. According to the federal government, they spent genuinely to improve the economy, in many billions fewer in tax revenue than predictable, since the Great Recession wrinkled Americans' revenue and expenditure. Afore is extra than America's yearly economic production as measured by its gross income.

The US federal government has applied a 'debt ceiling' which states that the Congress has to vote to increase the debt ceiling. Afore places a law on levels of administration debt and militaries Congress into restraining economic deficits deprived of it can approve to increase the debt ceiling. Nevertheless, it gets frequent disapproval by economists, (Gordon, 2018).

5. Obama's economic stimulus

In 2009, President Obama endorsed stimulus packages worth $800 billion. In 2010, $400 billion got added to the national debt as a result of the tax-cut cooperation stuck between the Republicans and President Obama, which extended which prolonged unemployed benefits and reduced payroll taxes.

In 2011, Congress was delaying on levitating the $14.294 trillion debt upper limit. The majority assumed this was the most fabulous technique to power the national government to stop spending. The federal government would then be required to trust exclusively on incoming income to pay continuing expenditures. It's inept technique to supersede the ordinary economic process. Amazingly, demand for Reserves continued strong, (Worrell et al., 2015).

Conclusion

In summary, the federal debt burden has decreased living standards among United States' citizens; it has also made it difficult for the government to deal with the matter efficiently both within and outside its borders. A partisan procedure incapable of determining the debt disaster is in the awful necessity of structural improvement and a balanced initiative to converse periods of federal financial profligacy. This effort advances a practical strategy for federal debt retirement, which is delicate to radical deliberations and economic certainties. The approach finds support in previous cases of active liability retirement and by forecasts of inevitable decline below the dominant progression of strategy. This bold suggestion should be of concentration to researchers, legislators, and citizens troubled with the central government debt.

REFERENCES

Aizenman, J., & Marion, N. (2011). Using inflation to erode the US public debt. Journal of Macroeconomics, 33(4), 524-541.

Gerbner, G. (2018). Invisible Crises: What conglomerate control of media means for America and the world. Routledge.

Gordon, R. J. (2012). Is US economic growth over? Faltering innovation confronts the six headwinds (No. w18315). National Bureau of Economic Research.

Lee, R., & Mason, A. (2011). 2. Theoretical aspects of National Transfer Accounts. Population Aging and the Generational Economy, 32.

Worrell, D., Belgrave, D., Arana, R., Croes, E., Dorinnie, H., Grenade, K., & McKenzie, S. (2015). Fiscal Sustainability and Debt in Small Open Economies: An Application to the Caribbean.