Who Do We Have to Thank?
Principles of Macroeconomics
January 20, 2013
It is no mystery that our national debt is beyond comprehension to the people of the United States. Our national debt is total of our budget deficits through the past years. To make the national debt recognizable to the normal individual, cnsnews.com has come up with a clever way of relaying it; every child born while President Obama is in office would have to pay a staggering $1,608,304 to pay off the national debt (Jeffrey, 2014). Considering that approximately 7.6 babies are born per minute in the United States alone and over 4 million each year these numbers are truly unbelievable. Each year’s increase of the budget deficit piles on to the enormous amount of debt that we already have accrued. In response to this, Congress and the White house attempted numerous acts, tax increases, caps on spending and many others to accomplish a budget surplus to ultimately start paying off the national debt.
One of the first “solutions” to the budget deficit was the Gramm-Rudman-Hollings Act of 1985. The acts goal was to reduce the federal budget from $200 billion to zero from 1986 to 1990 (Amacher & Pate, 2012). The act called for approximately a $35 billion dollar decrease in the budget deficit each year that depended on a set percent growth of the GNP. Because the growth of the GNP was slow the deficit rose because the projections of Gram, Rudman and Hollings exceeded what actually happened which made it impossible to lower the budget deficit (Duesenberry, 1985). The act entailed an escape clause for a recession; however 2% growth is not a recession and did not trigger it. Gram, Rudman and Hollings had projected a little less than 3.3% growth in real GNP each year but when 1% can mean over a billion dollars the decimal points matter significantly.
Following the increase in deficits President Bush and...
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