Question

Budget Deficits and the National Debt

The debate about the national debt has been around for a long time. Review this article about it:

Schneider, Bill. (Feb 6, 2015). The War Between Congress and the White House. Reuters.

And, in addition to the discussion of it in the textbook, please read the following Spark Notes about the national debt:

SparkNotes. Policy Debates: Budget Deficit.

Now, reflect on everything that you’ve learned about this debate. Then post one major reason why we should not worry too much about the deficit and the debt, and also one major reason why we should. In posting about this topic that is so hotly debated, you must maintain respect for one another.

Your messages have to include two types (at least one of each):

A paragraph-long original response to the guide question/topic, and

Answer 1

The first reason is deficit and debt, The United States government owe record amount of money to Americans, Foreign governments, corporations and investors. Should we worry about deficit and debt ?

As long as US government can raise funds at historical lows less than 2%, there is nothing to worry. 2% P.A is very much manageable with nearly very large amounts of debt. With inflation hovering at more than 2%, we actually have negative rate of return. Still US debt is top quality and nearly the best in the world.

But, there is a huge worry if Interest rates go up. If major central banks in the world like ECB, Bank of Japan and Bank of England offer high quality bonds at higher interest rates, then US government borrowing costs might go up. This is one big worry that we might face in future.

It is always good for a nation like United States to be lower on debt,