The National Debt Taylor Weeks

7/31/2014

In reading the article Reining in the National Debt it has really opened my eyes to how
rapidly the national debt has increased in the United States, and what a deep impact the recent
recession had on our economy. It is amazing to think our debt began with $19,608, and as of
2013 we pay that amount in interest every 2 seconds. Granted, that really shows the power of
inflation from 1789 to now. I would like to take a closer look at where our national debt
currently is, and what actions have been taken since this paper was written to further stabilize our
economy and reduce debt while increasing GDP.
As mentioned in the article, 14 years previous our debt was only 5.5 trillion as of today
we are 17.6 trillion in debt. Luckily, as mentioned in the textbook we are not in danger of
bankruptcy because of our ability to refinance debt. I found it interesting in looking at the
national debt it equates to $55,272 in debt per person, or $151,340 per taxpayer. We have raised
the debt ceiling, and even gone through another government shutdown since this article was
written as well. The increase in debt brought our countries credit rating from AAA to AA+. This
has all been done in hopes of seeing our economy run smoothly, yet we are just barely beginning
to see real progress.
The increase in debt has had an economic impact according to the article that has caused
Americans to lose confidence in not only our government but also in our economy and its hope
for the future. The effects of this were mentioned as restraint on investment spending, deter
consumer purchases, constrain bank lending, and slow foreign investment. The end result is
slower economic growth and persistently high unemployment. This debt continues to increase
because the government is continually spending more money than it is bringing in. Interest rates
are extremely low, and we have seen tax breaks in hopes of increasing consumer spending. I
understand that more spending in the key to more jobs but it seems trust that the economy will
rebound is what will drive people to increase spending. We have seen a jump in the purchase of
vehicles, and slowly the housing market is beginning to rebound. Maybe we have finally become
more comfortable, and trust that things will get better.
I find it amazing that congress actually had not passed a budget in 4 years at the time this
was written. It seems that our government is not as efficient as one would hope. It really opened
my eyes to why it has taken so long for our economy to begin to rebound considering the
recession ended in 2009. I did not realize that when I would read about budget cuts, it actually
meant the government agreed not to add more spending than already proposed. In my eyes it
seems there is a bit of selfish action here, instead of looking out what is best for the country as a
whole they are more worried about which program is getting the most funding, where is the
direction and leadership when needed? This year, 2014, the senate did finally pass its first budget
in 4 years and are looking to increase revenues by 975 billion over the course of the next 10
years I believe. Shockingly enough, the house did not want to make a change in taxes
whatsoever. As a taxpaying citizen, yes I do enjoy having some extra money for myself to buy
nice but I will absolutely pay additional taxes for the good of the country I live in.
The way the article is written it sounds as if we are doomed to an indefinitely decreasing
economy. Yes, we have seen inflation and the price of our dollar has dropped in comparison to
Euros for example, and it has taken quite some time for the government to pull back on their
government spending. Yet, there is a business cycle that is has proven true time and again.
During a recession we find ourselves in a period of decline, which means a decline in
employment, GDP, there is an increasing in failing business and it is up to the government to
intervene until we reach our bottoming out point or trough from where we begin to see a rise
or recovery. We recently posted an unemployment rate of 6.1% compared to the 7.7% posted in
February 2013. Also in the second quarter, April June, we saw a 4% GDP increase posted.
Also, in a recent article I read in the Wall Street Journal government purchase of treasury bonds
has finally decreased to 25 billion. We obviously are on the right track, and the despite the fact I
do not agree with all the choices that have been made by our government over the past 7 years
we are finally rebounding. I guess that is an example of our built in stabilizers that pushes the
economy back to its equilibrium.
The largest fear I have is to see how Chinas economy has grown while ours has shrank.
There are talks that a dictatorship could take the place of democracy as the ultimate form of
government across the world. I will continue to do what I can to stimulate our economy by
making as much money as I can and reinvesting it into the country in hopes that we remain a
world power and maintain our democratic government. For now we are seeing progress, and I
believe with consumer spending increasing by 2.5% and the price index by 1.9% things are
moving at a much quicker pace then we have seen in years.