Government Debt

By: Ryan Casaccio

Understanding Debt

The debt that the united states has, is owned by the federal government. The U.S has continuously had debt ever since the constitution went into effect. If the government needs to borrow 100 billion dollars more than its bringing in from any tax service they could raise taxes but that would be politically unpopular. It would also leave people with less disposal income. Another thing they could do is print off 100 billion dollars but that would lead to inflation. The price of everything would increase because there is more money cycling around. Instead the government would prefer to raise money in the credit markets, which means that they would issue bonds. A bond is a promise to pay money in the future. When the government investors bid to buy those bonds and the money that they pay is used for the government to raise money.

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The government is controlled by two parties. Both government parties are against debt but they have very different views of how to eliminate government debt. The Republican party believes the best way to eliminate government debt is to cut government spending and decrease government programs leading the responsibility of job creation and economic growth to the private sector. They feel the best way to accomplish this is to lower taxes and less government intervention. The democratic party feels the best way to eliminate government debt is to increase taxes. Their view for economic growth is done threw more government programs and viewing the federal governments responsibility for economic growth threw hiring more government employees.

This is very significant and historical because under the presidency of Bush Jr. and Obama the national debt has increased more than all 42 presidents before them. In the year 1920 our national debt was 25 billion. In 1950 our debt was 257 billion. By the time 1982 came we hit 1 trillion dollars for the first time. Today our national debt is over 17 trillion and counting. It is estimated that in 2022 our national debt will be 25 trillion.

I chose this topic of national debt because it will never go away and it is the most significant for my generation. If it continues to grow at this rate with out being dealt with and not being online with the nations GDP growth the United States will go bankrupt and the american dollar will be worth little to nothing.

Government Debt and You