National Debt

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RoderickE
At the time of this writing, the U.S. National Debt was estimated to be over 17 trillion dollars. Written out, it looks like this: $17,000,000,000,000. (Summarized position)

Obviously, debt is spending more than is brought in. The unique ability of a government over an individual person is that governments can simply print more money. Although this has adverse economical side effects, such as inflation. Inflation is when prices increase. The reason printing more money causes inflation is because the increase in money decreases its value -- it takes more dollars to buy things.

So, this explains why we can't just print 17 trillion dollars and declare our debt gone. Further, some of the debt is actually in the form of loans and interest on those loans. The U.S. government has borrowed money from several other countries and has an obligation to repay.

DEBT HOLDERS

PUBLIC DEBT
The 17 trillion dollars is "held or owed to different entities; such as I said before, other countries who have done things such as purchased U.S. "savings" bonds (to simplify it).
Other debt holders are the American people themselves, via school loans, home loans and such.
GOVERNMENT DEBT
Government debt includes such things as Social Security Trust. This is in theory where all social security taxes are held. However, at least two factors have caused this Trust to fall into debt:

  1. Paying out more than is brought in.
  2. Borrowing from the Trust for non-Social Security funding.

While I'm not trying to give an economics lesson here, it is important that the voter understand how and why there is a U.S. National Debt. Until we acknowledge the how and why of the Debt, we will be unable to fix it. As I said initially, the government cannot simply print more money. This will devalue the currency, making it worth less. Think of the exchange rate between the U.S. dollar and foreign currencies. If the dollar is devalued, it will cost more in U.S. dollars to buy foreign products and goods.


This slightly outdated graph from factcheck.org shows who holds what percentage of the U.S. debt.

debt chart

So, just like if you were trying to balance your own personal debts, there are two potential solutions:

  1. Increase income.
  2. Decrease expenses

The U.S. Government usually attempts to increase its income by increasing taxes. This often has short term benefits and long term negative effect. Taxing people more usually causes them to spend less on goods and services which in turn causes those industries that supply those goods and services to decrease production and the employees that produce the goods and service. So, overall this harms the economy.


Another way to increase governmental income is to keep the taxes level but increase the tax base. This means taxing more people without increasing the tax in general. This can be done by such things as immigration. Lastly, if people earn more, and supposing taxation is a percentage then there would be an increase in the funding of the government. The trick is figuring out how to increase the average salary of the American worker. Increasing minimum wage is as artificial as printing more money. It seems to have a short term benefit but eventually it increases prices and hurts anyone who was already making more than minimum wage, since now their wage value is decreased by the same amount the minimum wage was increased.


Finally, decreasing expenses means the government would need to cut or decrease funding to certain programs; such as welfare payments, military production, or even social security. All of this is extremely difficult as people become dependent upon these governmental services and often decreasing funding to any of them will have political ramifications with the voters.
This causes a dilemma for the government. How can it actually decrease the National Debt? It is not as simple as "spend less".

POTENTIAL SOLUTIONS

The solutions we are looking for would have the least deleterious effect. We cannot make appeals to one class over the other; such has been done with the supposed 1% rich versus the 99% of everyone else. Taxing the supposed 1% at higher and higher rates will not solve the problem. If we took 100% of their money, it would not make a dent in the National Debt, much less repay 17 trillion dollars. We need to stop with the class warfare political games to start talking real solutions.


First, we need to consider the 30% that makes up the "other Federal gov" and "all others" in the chart above. We need to figure out what this 30% actually entails and how much could be cut. For instance, are there redundant or unnecessary departments within the Federal Government. There are hundreds of departments within the Federal Government, including:

  • Bonneville Power Administration
  • Bureau of Reclamation
  • Council on Environmental Quality
  • Delaware River Basin Commission
  • English Language Acquisition Office



Now, perhaps these departments/agencies are important and are not being funded by the Federal Government, but this is the kind of thing we should look into. The Federal Government continues to grow every time a new department is added. As with businesses, we sometimes forget why a policy (or department) was implemented. It is time to review all departments within the Federal Government.


Then, since the 3 top Federal expenses are Medicare/Medicaid, Social Security payments, and Defense we will need to look at ways to run these expenses more efficiently. Obviously, cutting or decreasing funding to them at this point is not an option, but there is always more efficient ways to run a process.


Increasing the income of the American citizen is one of the best ways to decrease the debt. But again, we cannot do this artificially by imposing minimum wages. It will take efforts of increasing the value of America products and goods. This in turn should increase employment which will give us a larger tax base. I am opposed to raising taxes and would be more likely to have targeted tax cuts to initiate growth.

BALANCED BUDGET

Lastly, we MUST not increase the Federal Budget. The budget -- when the Congress sees fit to pass one -- is the proposed appropriations of funding for existing and new programs/projects. Just as in business, the projected needs to fund a program are often adjusted upward every year, sometimes even if there is no need to increase funding. The fear is, that if the program administrators do not submit an increased funding request that it may imply that the program is already operating at a surplus and could withstand reduction. By constantly implying the program/project needs more funding the administrators attempt to insulate the program/project. This is the kind of practice that needs to stop.


Political games in this area have caused "Government Shutdowns" where agencies and departments within the Federal Government actually or pretend to not have enough funding to operate and thus "shutdown". In this case, Congress often agrees to a "continuing resolution" which merely funds the government at previous budgetary levels.
Sometimes various politicians will seek a shutdown so as to appeal for a rise in the "debt ceiling". This is a statutory limit instituted in 1917 in an attempt to limit how much annual debt the government can incur.


Lastly, I'd like to say that some debt is actually "normal". Think about most American families. Even those with good financial practices have some debt, such as: mortgages, auto payments, school tuition. The U.S.A. is not the only country running in deficit. Indeed, most businesses appear on paper to run a deficit as cash flow doesn't always keep up with expenditures. So, while it is definitely important to NOT be in a crisis where we are spending more than we take in, and especially in regards to foreign countries holding our debt; debt itself is "normal" and shouldn't be used as a political scare tactic by any politician. There are tons of examples of the two parties scaring voters by saying the other party is going to cut this or that program. We need sensible solutions and less hype.

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