Question

Explain the threat that the national debt poses to the United States. What prevents politicians from balancing the budget, and reducing spending? How do you propose we force the government to reduce the national debt?

Answer 1

US government debt is rising over the past few years. Presently, Government debt is close to the 22.6 Trillion dollars which is larger than the size of the economy. it is estimated that government debt is approximate to 108 % of GDP of the country.

Increase in debt raises the level of economic activities and well being over the short run, but over the long run, Outcomes and repercussions are not favorable. The future generation is supposed to payoff all debts of present generation. If these debts are used for unproductive purposes, the future generation would not have enough money to payoff the debt. Further, international investment and domestic businesses would not show up interest in the domestic economy.

Currently, US economy is performing well and unemployment rate is below the natural rate of unemployment. Thus, it is right time to reduce the deficit of government. If any crisis hits economy, goverment would not have enough leeway to raise the level of expenditure. Government must reduce the unnecessary expenditure to keep ready for any potential economic crisis.