Should The US National Debt?

Topics: Generally Accepted Accounting Principles, Balance sheet, Investment Pages: 3 (745 words) Published: March 10, 2018


Debt or no debt? What is the answer to the U.S. national debt debate? The United States started accruing debt during the American Revolutionary War, it was paid off once, which lasted one year. Hence, since this time the national debt has grown in the trillions, so that the United States can be responsible to its financial obligations while allowing a streamlined approach for authorizing debt. This means that a “debt limit” was instituted by Congress to assist with this process and how much debt can be accepted and carried over time. Although, there are many angles, facts, and inferences of whether the U.S. national debt should be payed off or not, this paper will only touch on the risk of debt and conversely the governments need for debt....

pay off its national debt? Most importantly, is there a risk that the United States could default on their debt? While the total debt continues to increase, the risk of defaulting also becomes greater. Most importantly, why is the perception of defaulting on debt a concern? Since the United States has never defaulted on paying for the debt obligations over all these years. Consequently, the perception that United States may default would form cracks within the financial markets core and add risk with negative consequences to the subsequent debt that would be larger than the previous one before (Lew, 2017). The possibility of investors losing trust in the United States for paying back debt could result in demands for higher interest rates, or stop lending all together (Lew, 2017). Lessening the amount of U.S. debt, could lower the risk perception of defaulting on loans from investors and the financial...

Currently, the United States has a certain amount of financial flexibility, this was seen during the last recession to spur consumer spending and get big business out of financial bankruptcy, which in turn saves thousands of jobs. Yet, each time the U.S. digs deep into their pocket, the national debt grows and becomes more at risk of defaulting on existing loans. According to Zender and Xu (2016), “given the reluctance by political leadership to propose meaningful restructuring, we contend the real issue should be framed not as a matter of “if,” but rather “when.” The debate will continue, since the national deficit is needed at this point in time to sustain and provide infrastructure and programs that are vital for the country. However, as identified in this paper there is also an urgency to address the looming risk that continues to hover over the U.S. national deficit. Specifically, paying off or paying down the deficit would lower the risk and relieve some of the national debt...
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