Federal Debt and Deficit: the Solutions
The historical federal spending of the government has already done significant damage to America; spending habits have increased the federal budget deficit at alarming rates adding $2.7 trillion to the national debt in two years, $1.4 trillion in the 2009 fiscal year and $1.3 trillion in 2010. (Montgomery) These deficits are largely caused by increases in spending rates. The current Obama Administration has used the recession in their favor to expand both the government and spending.
America has not seen deficits of this nature since World War II with spending levels reaching 25% of the GDP and deficits reaching 10% of the GDP. And, even when this recession comes to an end, estimates show that annual deficits will continue to surpass the $1 trillion mark, and this could result in a myriad of adverse effects ranging from high interest rates to tax increases. Currently, federal spending per household, which has increased from $25,000 to $31,000 since 2008, is estimated to reach $36,000 by 2020 under the Obama Administration, and if spending increases at this rate, by default, so too will taxes. ("US Census Bureau") Even with his proposed tax increases estimated to allocate $3 trillion in taxes, President Obama’s budget would double the current national debt by 2020 to more than $20 trillion or $138,000 per household. Clearly, government spending is a significant contributing factor to the deficit and to the national debt. Entitlement programs like Social Security, Medicare, and Medicaid will continue to increase the deficit, but in order to continue to promote economic growth; Congress must put spending cuts into action.Policymakers shouldn 't think of spending cuts as a necessary evil needed to reduce debt. Rather, the government 's fiscal mess is an opportunity to make reforms that would spur growth and expand individual freedom. The plan below includes a menu of spending cut options for Congress, and further reforms are described at
America has not seen deficits of this nature since World War II with spending levels reaching 25% of the GDP and deficits reaching 10% of the GDP. And, even when this recession comes to an end, estimates show that annual deficits will continue to surpass the $1 trillion mark, and this could result in a myriad of adverse effects ranging from high interest rates to tax increases. Currently, federal spending per household, which has increased from $25,000 to $31,000 since 2008, is estimated to reach $36,000 by 2020 under the Obama Administration, and if spending increases at this rate, by default, so too will taxes. ("US Census Bureau") Even with his proposed tax increases estimated to allocate $3 trillion in taxes, President Obama’s budget would double the current national debt by 2020 to more than $20 trillion or $138,000 per household. Clearly, government spending is a significant contributing factor to the deficit and to the national debt. Entitlement programs like Social Security, Medicare, and Medicaid will continue to increase the deficit, but in order to continue to promote economic growth; Congress must put spending cuts into action.Policymakers shouldn 't think of spending cuts as a necessary evil needed to reduce debt. Rather, the government 's fiscal mess is an opportunity to make reforms that would spur growth and expand individual freedom. The plan below includes a menu of spending cut options for Congress, and further reforms are described at
Cited: In particular, see Budget of the U.S. Government, Fiscal Year 2012, Analytical Perspectives (Washington: Government Printing Office, February 2011), Table 33-1.