Please note! This essay has been submitted by a student.
The national debt impacts every citizen in America and the idea of it is a huge elephant in the room for every politician and taxpayer. The national debt has just recently hit 23 trillion dollars and is increasing at every second of every day. With no signs of slowing down or stopping it and with unbelievably massive debt, there is but one question, what are we going to do about this. Evidently, steps need to be taken by the United States to pay off this deficit. It is less clear on how to do that. Approaches vary to the extent that they contradict one another. There are various ideas on how to deal with the national debt in America. An alternative that seems better for the economy would before the United States Government to take initiatives such as increasing taxes, minimize entitlement, and cut spending.
Although it may be difficult, raising taxes will lower the deficit at a highly consistent pace. There is nearly 50 percent of Americans that pay taxes. It might seem as if many people are already more taxes than they already need. Nevertheless, the fact of the matter is that plenty of Americans can do more to help their government. While taxes would be at a bare minimum in a perfect world, we are not living in a perfect world. To raise taxes would require a steady flow of money into the economy. Over time, this would have a significant impact on reducing the national debt.
Reducing pension funds would help to reduce the debt significantly. Entitlement is one of the public money’s greatest destinations to go to. In 2017, Social Security accounted for nearly $945 billion. Medicare, Medicaid, Affordable Care Act and Children’s Health Insurance Program all together accounted for a colossal 25 percent of the United States budget, which turns out to be one trillion dollars. All of these combined nearly come out to two trillion dollars and reducing some of it by even 10 or 25 percent would help tremendously. Thinning out entitlement funds would enable the government to save that money or invest it into more dividend-paying projects. However, there would be an outrage in the United States if this would ever happen. Everyone likes money and less of it to those in need would be a huge no-go in America. Those in need would have even tougher roads ahead of them due to this and more programs would probably be created to help them, thus increasing spending.
It seems easy to reduce the deficit by cutting government spending. The argument is that lower spending would simply mean that less debt would have to be paid. The opposing view argues that in an effort to stimulate the economy, much of the money being spent is used. Cuts, however, would stimulate economic growth by moving the capital to higher valued private activities from lower value government activities. The jobs created by the government have a lower economic impact than corporate jobs. Private jobs create more goods compared to government jobs. The explanation for why this has not yet been applied is that the government is spending as an effort to stimulate growth at the moment. If this is unsuccessful over time, then it is possible that the government will turn to cut its budget.
One may think to themselves, who exactly does the United States owe money to? The truth is, a large portion of the debt is owed to someone within the United States. For example, Social Security and the government owes money to other parts of the government. There is a common misconception that China somehow owns America because of how much money the United States owes them, however, this is not the case. China is not even the number one country the U.S.A owes money to, it is Japan. Japan is the largest country holder of the United States debt with 17%, China is in second place with a close 16% and then the United Kingdom with a measly five percent, in comparison. The debt is repaid with a mixture of tax revenue and more debt from various individuals. People continue to lend money to the U.S simply because America is surprisingly good at parties back even with the interest added on. So, people will continue to loan the United States money because they will pay it back. If America did not pay that money back then they would not be receiving money from all these different countries and people.
None of these options are too enticing but Americans kind of dug themselves into this giant financial hole and must get themselves out before it is too late. In fact, it would be better to avoid all of these things, but that is not the facts. America is being forced to make compromises to boost its national economic status over the long term. Reducing government spending would make the economy waste less revenue as more flows in. Though investing to stimulate the economy is worthwhile and not too many politicians seem like fixing this as it is not a popular subject at the moment even though it is a dire one. Entitlement is an effective policy, but unfortunately, it is dragging the economy down dramatically. Taxation, though, can be a particularly effective way to help reduce the deficit and get the economy back on track in periods like these. While there is no perfect solution, it is very important to do whatever is necessary to reduce the deficit and then remove it. The United States can only continue to grow and prosper once this is done.