We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Nobody downloaded yet

US rising debt level and current economic problems - Essay Example

Comments (0) Cite this document
A budget deficit exists where the total government expenditure exceeds the revenue of the government. Government deficit means that the excess money needed to finance the government budget will have to be borrowed from other countries or be financed from donations…
Download full paper
US rising debt level and current economic problems
Read TextPreview

Extract of sample
US rising debt level and current economic problems

Download file to see previous pages... According to the forecast of the organisation for economic cooperation and development (2011), the budget deficit for US is likely to increase to 10% of the GDP. This projection means that the US government must formulate ways of arresting the looming economic crises as a result of the increasing deficits. The main reason why the public debt in America would increase is the need for the government to increase job opportunities by stimulating demand (Saad 2011). When a government intends to create more jobs, it will increase the level of demand by increasing its public expenditure and reducing the level of taxation. This had made the Obama’s government increase the level of public debt. At the same time, the 2008 economic recession could also be a reason for the increased budget deficit. After a recession, the economy of a country needs to be stimulated to increase the level of demand and to create more economic activities. This made the US government increased their level of budget deficit to increase the rate of recovery of the domestic economy (Amadeo 2011). The increased expenditure from external borrowing accompanied by a decline in the level of taxation must result in an increase in the level of public debt. If not closely monitored, the increased public expenditure will result in increasing level of inflation making prices of goods soar in the market. The increased cost in recapitalization and acquisition of financial institutions as well made the public deficit soar (Turner 2008). One of the causes of the economic recession was failure by the financial institutions to act decisively to rescue the depreciation in the economy. The failure by the credit rating agencies to give true credit risks made banks increase their mortgage loans that in the long run led to the recession. The US government as a result of this ventured into takeover of some banks which therefore meant increase in government spending making the economy experience a rising level of deficit (Saad 2011). The increases government spending accompanied by the declining tax rates was bound to increase the level of debt and this makes the projections of OCED realistic and important for government formulation. It must also be noted that the increasing deficit has made the democrats and republicans have clashes on the measures that the government should undertake to help reduce the level of deficit and the general debt level (Saad 2011). The two parties have agreed collectively on the short term measures of a cut in the government spending but have failed to agree on which areas that the governments should reduce spending. They also have different thoughts on the long term remedial. To correct the economic problems in the economy, the government can pursue a significant reduction in the deficit level. The US government through such a move would be in a position to reduce their increasing debt level and at the same time solve other economic challenges. A reduction in the level of budget deficit can be made for various purposes; the first reason for a reduced budget deficit would be to help reduce the level of government debt (International Monetary Fund 2010). For instance, the Obama administration projects that through the reduction in the government deficit for a decade would make the government solve the high level of debt (OECD 2011). Another reason for cutting the level of government deficit would be ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
(“US rising debt level and current economic problems Essay”, n.d.)
Retrieved from https://studentshare.org/macro-microeconomics/1393342-business-economics
(US Rising Debt Level and Current Economic Problems Essay)
“US Rising Debt Level and Current Economic Problems Essay”, n.d. https://studentshare.org/macro-microeconomics/1393342-business-economics.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document
The European sovereign debt crisis during 2010-2011
13 Print. 13 13 The European Sovereign Debt Crisis during 2010-2011 Background of the Financial Crisis The ‘Sovereign Debt Crisis’ is a serious havoc in the securities’ global markets, which make it difficult for universal “European Monetary Union” associates, to fund their budgets (Viana 2).
8 Pages(2000 words)Essay
Solutions for Rising Sea Level
The first of these is to ignore the changes hoping that they will eventually abate themselves or merely go away. Such an approach is unrealistic and unresponsive to the way in which environmental change necessitates changes in the way that humans behave towards and interact with their environment.
3 Pages(750 words)Essay
Current International Debt Crisis (Greece Crisis)
The crisis was a collective result of the sovereign debt crisis, crisis related to liquidity and also a crisis in the growth and competitiveness in that area. The countries in the European Union found it difficult to repay their debt without the support of any other entity.
4 Pages(1000 words)Essay
US stimulus package policy: path to prosperity or road to ruin
Spending our way out of the recession is made more problematic by the huge US debt incurred from eight years of Republican spending on two wars and a massive tax cut that failed to sustain any economic improvement.
5 Pages(1250 words)Essay
Debt Crisis in Developing Countries
Developing countries are faced with low standards of living, underdevelopment, and high poverty levels, weak and unstable currencies, low capital levels and low GDP. All the above problems faced by developing countries are caused by debts which affect not only those who acquire loans but also generations that follow.
12 Pages(3000 words)Essay
Debt Crises in the Least Developed Countries (LDC) and the Impact of the Debt Reforms in LDC
Many LDC face a huge debt burden. The low productivity of investment, slow export growth and large terms-of trade shocks, weak state capacities (including corruption) are all causes of the build-up of an unsustainable external debt burden. That burden keeps countries caught in a cycle of poverty, aid dependency, and unsustainable debt levels.
7 Pages(1750 words)Essay
Current Economic Problems Facing Our Country
Any changes in the external or internal factors affecting the society have a direct impact on the majority of the members of the society in which we live. The current economic situation is one such factor that has had a very strong influence on the lives of millions in the country.
5 Pages(1250 words)Essay
Economics Debt
First, governments have been running on budget deficits for longer than two decades. Secondly, prospects for global growth have been deteriorating over the past few months. Third, there is a growing sense of unease among many sensible people about government’s
4 Pages(1000 words)Essay
What factors account for the current level of public indebtedness in the UK and what economic and fiscal measures can the UK Government use to reduce that level of debt in the next 5 years
In many countries of the world this situation has resulted in an increased budget deficit and national debt. National debt can be defined as the sum of money the any government owes to the non-public sector as well as other buyers. Reinhart and Rogoff
7 Pages(1750 words)Essay
Let us find you another Essay on topic US rising debt level and current economic problems for FREE!
Contact us:
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us