The U.S budget deficit over the years has been a problem but lately the deficit has shrunk. However, what made the U.S budget deficit get to where it is today and what will it be like in the years to come. Throughout the past the U.S has operated under a deficit. This means that the U.S Spent more money than it was taking in. The cause of the excess in spending was different depending on which year. Some of the causes were war, increase in spending , and economic downturns. There were different acts passed to try and control the deficit problem. The deficit at the present time is declining. This decline is due to the improving economy, sequester, and a tax increase on high-income households. The big factor that went into the decline in the deficit for 2013 was the payment that Fannie Mae and Freddie Mac made. The deficit decline in the present time may make some think the U.S could get out of debt but it has been projected that the U.S deficit will start to increase once again.
Keywords: Budget Deficit, GDP, Budget Surpluses, Federal Debt, Economic Downturns, Tax Cuts
Introduction
Throughout the years the U.S has had more budget deficits than it has had surpluses. This is due to the excess in spending and not enough revenues to pay for it. Many have debated over the U.S budget deficit problem. However to fix the problem one has to research the past to figure out how the U.S budget deficit got to where it is now. Hopefully by figuring out this, one could project what the U.S budget deficit will look like in years to come.
Past
During the 1940's which would be the World War II and great depression era, there was an increase in debt. This was because of all the funding that went towards the war and New Deal policies. I...
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...t can not be controlled.
References
Congressional Budget Office. (2013, September 17). CBO. Retrieved January 27, 2014, from http://www.cbo.gov/publication/44521
Sahadi, J. (2013, October 30). Treasury: $680 billion deficit for 2013. CNNMoney. Retrieved January 26, 2014, from http://money.cnn.com/2013/10/30/news/economy/deficit-2013-treasury/
Singer, M. (2014, January 13). Federal government sees big December surplus of $53.2 billion, pushing yearly deficit down. Newser. Retrieved January 27, 2014, from http://www.newser.com/article/fe7be9ba15314eccab1c8f71d1d4f4dd/federal-government-sees-big-december-surplus-of-532-billion-pushing-yearly-deficit-down.htmlChromeHTML/Shell/Open/Comm
U.S Federal Deficit and Debts:Understanding the history and context. (2011, November 1). Utah Foundation. Retrieved January 25, 2014, from http://www.utahfoundation.org/img/pdfs/rr7
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"America's Great Depression and Roosevelt's New Deal."DPLA. Digital Public Library of America. Web. 20 Nov 2013. .
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The US has been in and out of debt countless times throughout history, going as far back as the Civil War. However, debt did not become a truly relevant problem until much later, in the 1980s (Budget Deficits). Up to that point, large budget deficits were generally only allowed during wartime, but this pattern ended after the Great Depression. Roosevelt’s New Deal meant that the government spent much more than it previously did, even after the economy improved (Budget De...
The national debt is usually a frightening topic citizens of any country, however, in the United States, twenty trillion dollars of national debt is one of the major fears of the economy. Along with this fear comes every politician claiming to be the person to lower this astronomical debt to ease concerns in the modern American economy. In Hamilton’s Blessing, John Steele Gordon tries to alleviate these concerns by showing a plethora of benefits and good the debt has been able to do throughout the history of the United States. The central premise of the book and the main guideline for John Steele Gordon’s thinking is that the debt was used to save the Union in the 1860’s, the American economy in the 1930’s, and the wellbeing of mankind during
The federal deficit refers to the difference between all the amount the government attains from taxes plus receipts (other revenues) and the outlays (the cash the government spends). On its part, the national debt refers to the overall debt as a result of accrued deficits in addition to the accrued off-budget surpluses. The national government with regards to on-budget deficits can borrow money by offering treasury securities to the public, which then adds to the total debt.
Americans bought bonds to help support the war and in return, would be repaid in full at an agreed-upon interest rate. A government refusing to repay its war debts, including the interest owed to bondholders, would seem untrustworthy to lenders. Citizens would hesitate to invest their savings in U.S. government bonds, or in new businesses, knowing that the government might break its promise to repay or might allow others to do so. In other words, the U.S. government was severely restricted in its capacity t...
One way the government can reduce the deficit is by spending less. Americans are known for spending. Whether it is on necessities or just simple wants, money is thrown out. Most of the time, we spend more money than what we really have. When you spend more than ones income, it causes a big problem. This is the main cause of the federal deficit. America has been spending more than its actual income. Every year, nearly $200 billion are thrown away through fraud, waste, and mismanagement. A lot of money is spent on unnecessary programs such as NASA etc. The set budget for the year of 2014 is $17.6 billion (Congress approved). This is money that can be spent on better options such as education or simply paying off the budget. In order to reduce the amount of money owed, the US must spend less. Spending less will allow the economy to recover and possibly pay off its debt.
During Bush Administration there was a large budget deficit due to unforeseen circumstances. Before George W. Bush take office as president, Bill Clinton developed budget surplus and eliminated budget deficit. This was achieved by collecting taxes and revenue from Social Security, Medicare and other programs. However, it was returned to budget deficit when Bush became president. During those years there were catastrophic events happening such as 9/11, Iraq War, oil shock, and other natural disasters. On September 11, 2001, there was a deadly terrorist attack that killed thousands of people. It was a tragic event that “resulted in extensive death and destruction, triggering major U.S. initiatives to combat terrorism and defining the presidency
The US government’s role in the Great Depression has been very controversy. Different hypothesizes argued differently on the causes of the Great depression and whether the New Deal introduced by the government and President Roosevelt helped United States got out of the depression. I would argue that even though not the only factor, the US government did lead the country into the Great Depression and the New Deal actually delayed the recovery process. I will discuss five different factors (stock market crash, bank failure, tariff and tax cut, consumer spending and agriculture) that are commonly accepted to cause the depression and how the government linked to them. Furthermore, I will try to show how the government prolonged the depression in the United States by introducing the New Deal.
There are things that our politicians have paid for, such as dinners out at extravagant restaurants, but are not necessarily something that needs to be spent. I have never understood how someone can pay more for one meal than most Americans make in a day on minimum wage. When it comes to specific programs, there are some that I believe we should eliminate to assist in eliminating our debt.”. Jiyoung responded as “Our government does spend money on a lot of unnecessary things. One example is military. I am not saying that military is unnecessary, it is something that makes us superpower, but the thing about it is that we spend more than 17 countries military expenses combined, and that is when you know that it is little excessive. I think there are also other things that we can focus on.” If government spending continue to be more than that they’ve collected for tax, no matter how hard they try to reduce the debt held by foreign countries, it would not work. We cannot keep on pouring water in a broken jar. U.S. debts in last decades by presidents are following: Woodrow Wilson, $21 billion: Franklin D. Roosevelt, $236; George W. Bush, $5.849 trillion, Barack Obama, $7.917 trillion. Miss Simpson believes that the debt spiraled out of control under
However, there is an indirect form of spending that also affects the US deficits in a negative way. Tax breaks are basically tax reductions for citizens written into the federal tax code to promote certain activities that they believe are beneficial to the public good of society in order to boost the economy. For example, they may give special low rates on capital gains or a deduction for mortgage interest rates. These tax breaks means that the government chooses to receive less tax revenue which means less money in the US Treasury, and are expected to cost the federal government $1.22 trillion in 2015. That’s more than all discretionary spending in the same
Veldhuis, Neil. “Beyond our means: Government debt tops $1.2-trillion and spending is still rising.” Financial Post. National Post, 16 May 2013. Web. 23 Feb. 2014.