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There is a very delicate balance that needs to be upheld in order to prevent the US economy from collapsing completely. The country’s massive debt is a possibly fatal factor that could offset the fragile balance and plunge the nation into chaos. We need change that will make the lives of US citizens better. I want to stop the United States economy from collapsing due to debt. Debt has been a major stressor on the United States’ economy since its beginning. The U.S. has been in debt since 1790, after the revolutionary war, and the debt has been increasing ever since.
The debt has increased through additional war, economic recession, and inflation. The national debt can be reduced through increased taxation, reduced spending, debt restructuring, monetization of the debt, or just straight up default. American citizens need to understand how debt is impacting their daily lives and how dangerous debt can be. As of 2018, the United States is 21.4 trillion dollars in debt. The United States’ immense debt puts the nation’s citizens in a constant state of financial instability. If the economy tanked, a natural disaster hit, or the political system went into turmoil, you could lose everything: your money, your assets, and possibly even your freedom.
As the federal debt increases, interest rates are projected to rise, and the federal government’s borrowing costs will increase markedly. Due to this, the government will spend more of its budget on interest costs, increasingly limiting the budget for public investments, and negatively impacting the daily lives of American citizens. Another way that debt negatively affects American citizens is by causing inflation rates to rise. Higher inflation raises prices and makes it harder to purchase basic goods and services like gas or car repair. Higher interest rates also make it difficult to afford a loan, ranging from a small amount to help launch a small business or a larger loan to buy a house. Whether it be limited public funds or difficulty purchasing daily items, the effects of national debt are never good.
If our long-term fiscal imbalance is not addressed, our future economy will be diminished, with fewer economic opportunities for individuals and families, and less fiscal flexibility to respond to future crises. Growing long-term debt also has a direct, real-world effect on the economic opportunities available to every American. CBO estimates that rising federal debt could reduce the income for a 4-person family by as much as $16,000 on average in 2047. This represents a 4.4 percent loss in income, compared to a 0 percent loss that would come from stabilizing the nation’s debt. If the nation’s debt remains unchecked, American Citizens could face many problems much greater than a 4.4 percent loss of income.
Prices would rise because the more money we borrow the higher our interest rates increase. If interest rates increase it causes the prices of daily items to also increase. As prices of goods go up, consumers demand less of it and more supply enters the market. If the price is too high, the supply will be greater than demand, and producers will be stuck with the leftover items. Consequently, as the prices of goods go down, consumers demand more of it and less supply enters the market. If prices are too high citizens would struggle just to buy food to keep their families fed. Eventually, supply and demand imbalances could cause thousands of people to lose their homes, struggle for food, and even lose hope.
When prices of everyday items increase it causes people to spend more and more of their paycheck of basic needs they need to survive. Because of this, it would become increasingly more difficult to retire at a young age or even at all. If people are losing more money than they are gaining, it causes them to lose the things they want, such as a new game system, so they can pay just to have a house. This means less and fewer people will live comfortable lives and the middle class would shrink until, eventually, it disappears entirely. If this does happen, people would either become poor or live rich and extremely comfortable lives. However, most people, even rich people, are likely to become poor. Increasing prices on basic necessities would lead to the disappearance of the middle class.
If these problems come to pass, or even start to occur, the media could easily make the situation immensely worse. The media has a tendency to blow things out of proportion and over dramatize common news. If the media broadcast news of economic collapse nationwide, people would begin panic and eventually resort to violence and crimes to feed their loved ones. Such widespread hysteria could even cause chaotic riots and unruly protests, which could result in thousands of lives lost. The national debt issues are large enough on their own, the media would only heighten their severity.
The consequences of increasing national debt are grave; however, there are several ways to make sure this is avoided. First of all, unnecessary and wasteful spending can be reduced at the Pentagon, which now consumes over half of our discretionary budget. Much of the extensive spending at the Pentagon is devoted to providing money to Cold War weapons programs to fight the Soviet Union, which no longer exists. Lawrence Korb, a prominent Assistant Secretary of Defense serving Ronald Reagan, estimates that “we could achieve savings of around $100 billion a year at the Pentagon while still ensuring that the United States has the strongest and most powerful military in the world.” By reducing spending on the Pentagon, the nation would save a significant amount of money that would certainly help pay off the debt in the US and avoid a national crisis.
The national debt could also be reduced by recommending a combination of spending cuts and reforms, including an increase in the Social Security retirement age. Increasing the federal gasoline tax is another way to help. With newly employed spending cuts, the United States’ debt would diminish over time by a significant amount.
If the government establishes a progressive estate tax on inherited wealth of American citizens of more than $3.5 million, that would raise more than $300 billion over the course of 10 years. In 2010, Senator Sanders introduced the “Responsible Estate Tax Act” that would reduce the deficit in a fair way while ensuring that 99.7 percent of Americans would never pay a penny in estate taxes. Even though this tax could cause anger among the estate owners, the nation would benefit far more than they would suffer.
Eliminating the cap on taxable income is another way to produce revenue that would help pay off the national debt. Millionaires and Billionaires should pay more taxes when the rich have the ability to provide significantly more support to the nation. Also, if the nation falls into chaos and the economy collapses, it would cost these wealthy individuals far more than slightly higher taxation would. Overall, taxing income at a certain percent would benefit all citizens, even if the rich are temporarily angered by the inconvenience of even higher taxation.
The national debt is not a small insignificant problem, like most people believe, for several reasons: increasing debt will cause prices of everyday items to rise, subsequently causing the middle class to shrink, and eventually causing widespread panic among US citizens. In order to stop chaos from ensuing, money to pay off the national debt can be raised through budget cuts and increased taxation on the rich to support the nation; however, it will not be without repercussions. Ultimately, the solutions presented above (or others of similar nature) must be enacted in order to prevent the collapse of the United States’ economy.
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