It is possible to notice that in the contemporary world there is a growing concern about the increasing United States federal debt. In 1776, this rate was equal to $800 million approximately, while in the present day the number reached $28.5 billion (US Debt Clock). It is possible to outline the reasons for this rapid and constant growth and provide an insight into the mechanism. The debit arises when the governments spend more than receives in taxes, or other words when public savings are not enough to cover necessities. It results in the need to borrow money instead of adding to the nation’s savings (Greenlaw et al.). The reasons for budget deficit rises are: domestic private investment falls, private savings rise, and trade deficit rises.
I am a fiscally conservative person and I tend to the opinion that the balance between spending and obtaining shall be found through reducing the financing of less important budget items. I am confident that among the three major expenditures are mandatory and discretionary spending and interest on the national debt, the second one shall be reduced in financing (Kimberly). It is so because I believe that military spending is overestimated and for the nation of peace that shall only protect its citizens and not participate in wars, such expenses are inappropriately high (Federal budget: What would you cut). The savings could be used to compensate for the budget deficit.
United States’ debt-to-gross domestic product ratio is one of the highest in the contemporary world. Only such countries as Portugal, Italy, Greece, and Japan are behind (Budiman and Desilver). Simultaneously, the amount of the debt is the highest. It can be related to the length of life and the number of retired citizens that can be considered a burden on the budget from this perspective. Moreover, the United States spends less on interest payments than other countries and more on budget items.
In this case, the balance between spending taxes on repairing the roads and the usefulness of such action can be evaluated. Despite federal investment in physical capital, particularly in transportation reaching $91,915 million, it cannot be considered an appropriate sum unless traffic delays are prevented (Greenlaw et al.). On the other side, there is no necessity for small but regular improvements of main roads that do not influence the safety of roads and traffic directly.
It is possible to notice that mandatory spending items, especially Medicaid and Medicare, are rapidly increasing. There are several ways to manage the issue: modernize Medicaid by transitioning to a premium-support system and cap federal contribution to it. It also might be beneficial to provide states with higher flexibility in administering the program, and respectively, the greater responsibility for welfare programs running (Bogie and Boccia). The ground for this reform is the notion that states might be more aware of their citizens’ needs than the federal government.
A balanced budget amendment that implies the requirement for the expenditures of the budget to not exceed revenue is a controversial and widely-discussed proposal. It seems a good course of action that is intended to result in preventing federal debt from further growing. However, it would limit the flexibility in managing the programs and might result in a recession of weak economies that would become unsupported (Baumann). In addition, it might result in complexity and the increased duration of the budget approval process because of the necessity to choose between expenditures to cut.
Works Cited
“Federal budget: What would you cut?” Washingtonpost.
“US Debt Clock.” UsDebtClock.
Baumann, David. The Balanced Budget Amendment Debate. ThoughtCo, 2019. Web.
Bogie, Justin and Boccia, Romina. These 5 Changes Would Fix the Nation’s Budget Woes. The Heritage Foundation, 2018.
Budiman, Abby and Desilver Drew. 5 facts about government debt around the world. Pew Research Center, 2017.
Greenlaw, Steven A., et al. Principles of Macroeconomics. 2nd ed.
Kimberly, Amaded. U.S. Federal Budget Breakdown. The Balance, 2020.