The National Debt - Assignment Example

The National Debt When President Obama was announcing the budget request FY201 on February 14, he projected that by the end of September 30, which marks the end of the FY2011, the U.S National debt would be $15.476 million! This is very alarming since this represented about 102.6 % of the gross domestic product (GDP) of the US. Considering the whole population, this represents about $ 49, 762.06 for every woman, man and child. The total population of the US is almost 311 million, but of this, children do not pay taxes, hence, the debt of every taxpayer was postulated to hit $ 139, 632.24. By July 26th 2011, the debt sat at $14.539 trillion, which represented a figure of approximately $130,020 for every tax payer ($46,621 for every citizen). Even though these figures area bit lower than the postulated figures by President Obama, the truth is that the national debt has been abnormally high over the years, and it is currently one of the World’s highest when compared to other nations. The extremely high figures for the national debt are an indication of the nation’s fragile economic state when compared with other industrialized nations. The current national debt places the nation in a very delicate economic state, hence, the federal government needs to come up with countermeasures otherwise we are headed for economic doom (Clark 34). The US Debt clock portrays the economic situation of the nation by comparing different budgetary allocations and the gross domestic product. It is an accurate index that run by a non profit, non-partisan, non-governmental organization that uses government data for projection. The US Debt Clock changes literally, every second. Staggering statistics derived from the US Debt clock on July 26th of 2011 revealed that the total interest due for every citizen was $3.637 which amounts to $11,644 per US citizen. From the statistics also, it was revealed that the biggest budget item was Medicare with an allocation of $823.1 billion. This has continued to rise over the previous months, and it is still rising with the passing of each day. Social security was allocated a $715.5 billion budget and this is also rising. The Department of Defense came third with $702 billion, and also, this has been rising over the previous months. Therefore, the extremely high budgetary allocations have for years contributed to the high national debt. Medicare, Social security and defense matters are aspects whose importance cannot be overlooked. Without sufficient Medicare, the swelling population will be affected immensely; hence, this is the reason for the increasing budgetary allocation to Medicare/ Medicaid. Disease incidences are increasing, and environmental factors are also contributing to more disease conditions and natural calamities. As a result of this, figures for Medicare are still rising, and these will continue rising for years (Omond 87). Statistics as of June 26th 2011 revealed that the number of unemployed persons in the US was officially 14,028,907. However, the actual figure of unemployed persons in the US was just below 25 million people at this time. The US population was about 311 million people at this time; hence, this is an indication that approximately 10 percent of the US population was unemployed during this time period. Therefore, 10% of the US population bears the brunt of paying the national debt even though they are not employed. Current figures according to the US debt clock places the population at 312, 746,148. Of this population, income taxpayers are 112,638,116 while people who are officially unemployed are 13,257,912, while the actual figure of those unemployed is 23,949,554. The current US workforce is about 140,623,356 while US retirees number 66,365,878. Therefore, the US population continues to face the brunt of the national debt. The national debt in the US is very horrific. The US government has experienced one of the greatest debt binges in human history, and this does not seem to be subsiding. Many people continue living beyond their means so that it has become difficult to discern what a normal lifestyle is. For years, the US has enjoyed the greatest fame in the world, but, the current economic situation is like a disaster that is waiting to explode. Bills and bills keep rising, and not unless the federal government comes up with countermeasures, the US will one day find itself in the same predicament as the one of Greece. The economic horror that Greece is beginning to experience previews what the US will likely experience in future. Just like in the US, Greece also had a large national debt, and this culminated in very serious consequences (Peterson 38). A large national debt is not only unfavorable for the US but also for the whole World. This is because, the US controls world commerce. If the economy of the US were to collapse, it would also mean that the economy of the entire globe would also collapse. Present taxpayers are leaving their children and grandchildren as the ones to bear the brunt of the great national debt. The future is not bright for the future generations because, with a national debt of approximately 14 trillion US dollars, challenging economic situations await. These young people will not be able to repay this extreme debt. Unemployment rates still continue to soar, and with present projections, is evident that unemployment rates in future are going to skyrocket even to 40%. This is not a good sign for the economy. Current statistics concerning the US national debt are extremely damning, hence, something needs to be done so as to avert the crisis. About 30 years ago, the national debt was 14 times smaller than the present value. This is an indication that there is something amiss with economic policies of the nation. Besides, there has been inheritance of these problems. For example, transition between George Washington’s presidency to Ronald Reagan’s generated over one trillion dollars worth of debt. After that, there has been an increment of more than thirteen trillion additional debts. Therefore, by 2025, the national debt will be 28 times the value of debt 30 years ago (Sandak 102). The debt ceiling However, critics in some quarters are quick to point out that we do not need to be alarmed about the national debt since the debt ceiling will be able to alleviate the effects of the extreme national debt. Politicians have for years argued that, through their policies of debt ceiling, the nation is going to emancipate itself from the effects of the extreme national debt. Some economists argue that the national debt is not as dangerous as it seems since the nation can inflate its way out of debt. However, the debt ceiling does not sound convincing to me. Trying to inflate the nation’s way out of debt will does not seem to work since interest rates will most likely rise just like inflation is rising. This would be very catastrophic. Moreover, rapidly rising inflation rates would imply that the value of all bank accounts would be destroyed and people’s individual financial assets would be annihilated. Therefore, inflating our way away from extreme debt is not going to work as this would complicate the economic situation than the one presently being experienced (Clark 36). What may seem to work is if the nation raises the debt ceiling higher. By so doing world financial markets will be protected from immediate collapse. However, what is evident is that world financial markets are going to crash eventually and the eventual economic stalemate will be the worst ever in the land. Hence, it is evident that the debt ceiling will not work at all. Better policies need to be put in place. What seems to sustain the economy is that the government borrows large sums of money at extremely low interest rates. However, when this will change, economic suicide is bound to occur. Recommendations The current US national debt stands at about 14 trillion US dollars, and this debt is rising by over 4 billion dollars daily. Statistics also reveal that the US government borrows about 168 million dollars every single hour. The US national debt has continually increased 55 years in a row, and this is very alarming. It would take about 440,000 for the US government to pay off the horrific national debt! This implies that the national debt will take time to normalize. However, the federal government can come up with measures that ensure that the national debt starts depreciating every year instead of actually increasing every year. The national debt needed to have been handled about 30 years. Neglect at that time culminated in the current situation. Therefore, if present situations need to be avoided in future, potent economic policies need to be put in place so that there is a reduction in the current debt every year. Budgetary allocations are also increasing every year and this is straining the country’s economy. Budgetary allocations to Medicare, Defense and Social security are increasing by the time. These are very important sectors of the economy, but the federal government needs to standardize these budgetary allocations. Extreme over-allocation is worsening the national debt since the government has to borrow a lot to take care of all these sectors. A horrific economic collapse is looming. We should all prepare for it if at all the current situation does not change! Works Cited Clark, G.E. "How Are Our Federal Dollars Spent." Lifes Little Mysteries (2011). 34-37 Collapse, The Economic. "National Debt." The Economic Collapse (2011). 23-27 Omond, T. S. The national debt: its origin and political significance. London: T. & G. Shrimpton, 2009. Print Peterson, D.E. "How Much is the US National Debt." Lifes Little Mysteries (2011). 37-39 Sandak, Cass R. The national debt. New York: Twenty-First Century Books, 2009. Print Read More