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Reasons for Debt Crisis - Assignment Example

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The paper “Reasons for Debt Crisis” outlines the looming economic crisis that is bound to hit the American nation if certain policies are not changed. Debt is steadily increasing with most citizens unwilling to sacrifice their spending to guarantee the sustainable growth of the country…
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Reasons for Debt Crisis
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Download file to see previous pages Federal debt is one of the very few, but the crucial reason that is leading to the looming fiscal crisis (The White House 7). Spending is increasingly rising at a tremendous rate leading to low revenue. Most Americans are spending tons of money to buy goods and services way above their value in the American market. Rather than cutting on such expenses and buying services that add value to their life, they are busy overspending on unnecessary commodities. Subsequently, this leads to the borrowing of money by the federal government to close the gap and fill the difference. For example, the report suggests that in 2010, federal spending was 24 percent of the country’s GDP (The White House 11).
Overspending is not the only reason behind the crisis but also the history of the American Nation suggests other key possibilities. The country was involved in two world wars, and the second one led to the rise of debt in the country. Economic instability can take years or even decades to fix, but it also takes patience and a number of active policies to curb. As much as the Second World War led to an economic crisis in the Nation poor economic, policies and the recent global economic meltdown are to blame.
Poor prioritization on what the federal revenue should finance is also another cause of the crisis. Healthcare and social security are a significant aspect of the American economy and thus ought to be prioritized when it comes to being financed. Revenue should not fund the debts of buying unnecessary lavish spending of the government agencies or even their citizen. Necessary services and goods are the only debts that should be financed by the revenue. Tuition fees, transport, defense, energy, and medical care are among the necessary services that should be prioritized. Rather than squeeze financing critical government sectors, policies should restrict the funding of payments that buy goods and services. ...Download file to see next pages Read More
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