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This happened since the government did not want a repeat of 2001 fiscal crisis, which was because of the Congress refusing to raise the debt ceiling. However, raising the debt ceiling has driven the national debt to wanting levels; $14.3 trillions.
In my opinion the debt ceiling should be raise, but as a short-term measure. This is because failure to raise the ceiling would have consequences. The first consequence is that the government may be unable to pay its workforce their salaries. This may lead to unrest in the country. Secondly, the government may default on what it owes other creditors, for examples, holders of government securities. These are monies in terms of bonds’ principal and interest. This would result to the US government having a bad credit rating. Government securities’ risk would go up causing the rate of interest attached to them going up. As a result, the cost of capital in the entire economy would go up thus increasing the cost of doing business. This in turn would lead to economic growth slowing down (Allen, 2012).
Thirdly, foreign investors might lose faith to the US government thus refusing to lend to it. They may also sell their US government’s securities. This, in turn, may lead to the dollar losing value against the world currencies. All these may compound the situation and return the economy back to recession (Allen, 2012).
Additionally, other conditions should accompany the raising of the debt ceiling. These should be long-term measures. First, the government should cut spending on unproductive activities such as wars and defense. These are some of the government expenses, which do not add value to the economy. Cutting spending on these activities would reduce the budget deficit, which would enable the government to lower the debt ceiling in future. Finally, the government should increase taxes on corporate and the rich to reasonable rates that should not hurt the economy. This too would help in reducing the budget
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A Comparison of Public Budgets Public budgets are instruments of the government at the federal, state, and local levels. They are instruments in the execution of government spending policies and a forecast of expenditures and revenues. All of them combined contribute to the national economy and are affected by policy measures and practices at each level.
According to the study conducted even though the debt ceiling play an important role in controlling the government borrowings and spending, it has been raised a number of times. A small change is acceptable since there is a factor of inflation continuously prevailing globally and it keeps depreciating the values of currencies but a large rise in the debt ceiling may be questionable.
These are all important contributors to the common good because each of them affects American citizens in their individual daily lives as well as in the collective long-term outlook of American quality of life, whether they are at home or traveling abroad.
For this reason, we must look not only to the history of previous debt ceiling increases, but to the future concerns of American sovereignty in order to ensure continuing the history of debt ceiling increases is in the best interests of our constituents. After closely analyzing past trends and comparing them to the future insolvency of the federal government, it is my direct recommendation that debt ceiling not be increased.
raphy 20 Abstract The paper highlights the varying financing requirements of the business venture at the various stages of development. It has been shown that at very inception the business has to rely on ‘seed capital’. It has also been shown how the businesses fund the opportunities at the expansionary and development stage.
Capital management needs to be long term so that the profits gained by a particular company are noteworthy and massive. Whenever a business drafts strategies for long term capital investment, these strategies should be centered on getting a risk free and the most efficient investment venture.
The industrial development of Ontario is characterized by market failures such as negative externalities, monopolized market powers, agency problems, and information asymmetry. These economic failures impact negatively on the general economic performance of Canada, both in the long-term and short-term.
The paper also discusses Cochrane’s key claim and comments on that key claim. It asserts that on balance, there is some weight to the argument of Cochrane relating to the threat of inflation from sustained fiscal deficits and loss of lender confidence in American debt leading to the government needing to fund deficits by printing dollar.
The debt limit is an aggregate amount that is relevant to gross debt, which incorporates debt in the hand of intra-government, as well as public accounts. Almost 0.5% of United States debt is not covered by this ceiling. Since government expenditures are legalized through a separate law, the debt limit does not openly restrict government debits (Abotalaf, 2011).
Taxes can be direct or indirect, direct being the ones levied on a certain group of people like the salaried class or a certain income bracket. Indirect taxes refer to taxes that are collected directly
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