Government Debt and Global Competitiveness - Essay Example

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Government Debt and Global Competitiveness Name Texas A&M University-Commerce In partial fulfillment of the requirements for MKT 521 Professor Lloyd M. Basham May 11, 2012 Table of Contents Abstract…………………………………………………………………………………………
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Government Debt and Global Competitiveness
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"Government Debt and Global Competitiveness"

...5 Leadership Practices…………………………………………………………………………....6 References……………………………………………………………………………………...8 Abstract Due to the recession in 2008, the country has incurred a lot of government debt. Today, policy makers are taking into consideration having a debt limit for the country. The debt limit would mean that the taxpayers need to shoulder additional expenses and taxes plus slow economic growth. However, this would be a big help to the government in lowering its debt and attracting foreign and local investors. The second option aside from having a debt limit is a default on the debt, meaning a no-pay for the government. This would of course make the deficit lesser but the image of the US will be tarnished forever and would be a major catastrophe. To help nullify the default, awareness and support in my side is needed. These little efforts may mean a lot especially if many would follow me. Also, aside from the efforts, leadership practices for global competitiveness will be done by me. These would include having dedication, following the company’s commitment, being honest, constantly training to be better and having the focus to achieve desired goal. Keywords: US Government Debt, Global Competitiveness, leadership practices Government Debt and Global Competitiveness US Government Debt Government debt is the stock of outstanding IOUs issued by the government at any time in the past and not yet repaid (Seater, 2008). To avoid incurring huge government debt, a limit should be followed. Debt subject to limits has two components, debt held by the public and intragovernmental debt (Concord Coalition, 2011). Debt held by the public is debt by any individual or entity besides the federal government such as mutual fund, individual investor or foreign government. Meanwhile, intragovernment debt is the debt government owes to itself such as Trust Funds from Medicare Hospital and Social Security. According to the Congressional Research Service, as cited by the Concord Coalition (2011) Congress has always placed restrictions on federal debt.  Prior to World War I, borrowing was often authorized for separate purposes such as military activities and the construction of the Panama Canal. The current statutory debt limit, $14.294 trillion, was established on February 12, 2010 (Concord Coalition, 2011).   When revenues received by the Treasury are not sufficient to meet the expenses of the federal government, the Treasury borrows to obtain the cash necessary to meet its obligations. The financial crisis in 2008 was one of the main reasons of the recent debt buildup. Due to much debt incurred in housing loans which triggered the recession, the national debt ballooned. According to the Concord Coalition (2011), in July 2008, the Housing and Economic Recovery Act increased the debt limit by $800 billion to $10.615 trillion. In October, another addition was needed and a $700 billion increase was attached to the Emergency Economic Stabilization Act of 2008.  Then, in February 2009, the American Recovery and Reinvestment Act of 2009 raised the statutory limit to $12.104 trillion.  In February 2010, the limit was raised to the current level of $14.294 trillion, an increase of $1.9 trillion. Default on the US Government Debt In a deep recession, debtors may become unable to repay their debts and Read More


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