US National Debt & Social Security/Medicare - Essay Example

US National Debt Countries across the world are experiencing an increase in debts. The US has seen its debts rising to 62% percentof the economy in 2010. Economists point at the global financial crisis as the cause of this rise. Additionally, during the worldwide recession, most countries including the US saw slow growth in the economy. Countries in the world are spending more money on pensions and health care programs. It is the reason for the increase in debts. Economists argue the US will have the biggest debt in 2040.

The level of debt will be unsustainable. Researches indicate that unfunded obligations held by social security and Medicare is the reason the US debt would be so large. With an end to the global recession, economists predict the world economy would not fully recover. Debts will continue to increase hence affecting negatively on the economy. Deficits will cause the interest rates to rise. It is a means of covering the risks associated with the losses brought by the deficits.Debts will cause economic resources to be scarce.

The government will direct the available resources towards paying the debts. For instance, the US, which borrows externally, will have to avail its internal resources to pay debts outside the US economy. The debts will cause a reduction in investment opportunities. Investment is the backbone of the economy, and a reduction in it will result to slow economic growth. Furthermore, without clearance of debts, there would be high levels of debts in future.The US has implemented reforms in the social security, Medicare and Medicaid sectors.

It is a means of reducing the country’s debts. The reforms include report long-term obligations, create long term budgets for entitlements, and make retirements fair and affordable (Moore, 2010) ReferenceMoore, N. (2010). U.S. Debt Load Among Worlds Worst. Social Security and Medicare will break the bank..