United States Debt
The United States debt means a total of all the debts that the federal government owes that are outstanding. According to Newman (2013), The United States has the largest sovereign debt in the world and goes toe-to-toe with the European Union. The state’s current outstanding debt is shown at the United States Treasury. Chessman (2011), says that on the 15th of March 2018, the United States debt was exceeded by approximately $21 trillion, a figure which keeps changing from time to time.
The state’s debts is placed into two categories Chessman (2011); debts held by the public, and intragovernmental debts. The debts held by the public are two-thirds of the whole debt and are owed by the government in form of bonds, either by citizens of the country, foreign governments or international investors. Intragovernmental debts are what the government owes to other departments of the government, for instance; The United States Social Security.
Causes and Effects of The Debts
The government employs a certain policy called the expansionary fiscal policy to attempt to boost the economy, which works at least for a short term. In the opinion of Newman (2013), this is achieved by expanding the supply of money into the economy. This way, they increase spending and also cuts taxes. Subsequently, politicians as well as their voters start to spend so much. According to Chessman (2011), when the national government debt keeps on increasing, it eventually stagnates. Holders of the debt hence increase their interest rates and the debtors end up unable to repay.
Conclusion
One of the ways to reduce national debt is to first reduce spending and cut taxes as well, especially on departments that do not bring much revenue or rather create many jobs. This is because cutting spending in areas other than those will lead to slow economic growth, which results to a large deficit and low revenue. All of these is mainly because the spending of the government is a component of its GDP.
Works Cited
Chessman, T. L., 2011, “Understanding The United States Debt.”
Newman, F.N. 2013, “Freedom From National Debt.”