Cutting The National Debt Essay Research Paper

Cuting The National Debt Essay, Research Paper

Cuting the National Debt

& # 8220 ; It & # 8217 ; s clip to clean up this mess. & # 8221 ; Famous last words heard from the

oral cavities of many different politicians when speaking about the national debt and

the budget shortage. Our debt is presently $ 4.41 trillion and we have a budget

shortage of around $ 300 billion and turning. Our authorities now estimates that

by the twelvemonth 2002 the debt will be $ 6.507 Trillion. While our politicians talk of

equilibrating the budget, non one of them has proposed a executable program to get down

paying down the debt.

In the early yearss of our authorities debt was considered to be a last

resort. In 1790, when Alexander Hamilton, as secretary of the Treasury, made

his first study on the national debt of the United States, he estimated it at

near to $ 70 million. After alternately lifting and falling, the debt stood at

merely $ 4 million, or 21 cents per capita, in 1840.

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That was the lowest point of all time

reached by the public debt of the U.S. After 1840 it rose to a extremum, in the last

twelvemonth of the Civil War, of about $ 2.68 billion and a per capita figure of $ 75.01.

The lone justification for debt of any important sum was a war. By 1900

this had been reduced to under $ 1 Billion. By 1919, the terminal of World War I, the

debt had climbed to $ 25.5 Billion. In each of the undermentioned old ages the debt was

reduced, and by 1930 stood at $ 18.1 Billion. With the prostration of Wall Street in

1929, the state

( debt history: 1850 to 1950 ) fell into the Great Depression, which lasted

until 1940. At that clip the debt had climbed to $ 51 Billion. By the terminal of

World War II the debt was $ 269 Billion.

Again the authorities worked to cut down the debt, and by 1949 it was

$ 252.7 Billion. At that point the Korean War started, directing the debt to $ 274

Billion by 1955. Since so, there has been no serious attempt to pay down the

debt. The chief point to be made was that on three separate occasions a major

debt decrease attempt had been made, but in the past 55 old ages in malice of much

arm-waving there have been no similar consequences.

The U.S. debt is divided into two major sorts of loans, marketable and

nonmarketable. The former provides about 52 per centum of the sum and is made up

of measures, notes, and bonds that can be traded ; the latter includes U.S. nest eggs

bonds, foreign-government-owned securities, and authorities history securities

that are redeemable but non tradable. Adulthood of this debt ranges from less

than a twelvemonth to over 20 old ages, with the mean adulthood about 3 old ages. More than

half of the debt, nevertheless, is short term, maturating in less than a twelvemonth. A

ceiling is placed on U.S. federal debt, and Congress must ordain new statute law

to raise the ceiling. Between 1981 and 1990 the ceiling was raised from about

$ 1.08 trillion to about $ 4.15 trillion.

Unfortunately at the terminal of 1995 we reached the ceiling once more, and

Congress refused to raise it. They felt that it had become excessively much, and at that place

was a authorities closure for a few yearss in November. Not merely was this an

incommodiousness to many people, it besides accounted for an estimated $ 63 million a

twenty-four hours in lost productiveness, and about dual that in lost revenue enhancement gross.

Due to the menace of this, Clinton has a program to equilibrate the budget by

2005. This program includes a jutting $ 1.1 trillion disbursement cut over the following

ten old ages, decelerate the growing of disbursement on Medicare and Medicaid, spare societal and

farm plans, near a figure of corporate revenue enhancement loopholes and retain the bundle

of middle-class revenue enhancement cuts he proposed before. He besides specified that plans

such as Social Security, instruction, and preparation would be immune from such cuts.

He did warn though, ? Make no mistake & # 8211 ; in other countries, there will be large cuts,

and they will ache. This was June of 1995, and at the terminal of Fiscal Year 1996,

the national debt growing was $ 80 billion higher than old projections, with

a concluding debt addition of $ 331 billion.

Where does this money travel? This happens to be the most popular inquiry

asked, yet the 1 cipher has a definite reply to. Out of all of the topographic points

the authorities spends money, more than 50 % goes to three chief countries: defence,

Social Security, and Medicare and Medicaid, all of which combined history for

between $ 750 and $ 900 billion per twelvemonth. In the instance of national defence, there

are a few different points to be made in justification of these outrageously

high Numberss. First, the costs in the 1940s and 50s due to both World War II

and the Korean War. Next comes the costs of the War in Vietnam in the mid-1960s

and 1970s along with LBJ & # 8217 ; s Great Society Programs. This tendency of large disbursement

continued on through the until the terminal of the 1980s under Reagan & # 8217 ; s Cold War

plans. With the Cold War over, and the United States recognized as the

universe & # 8217 ; s merely world power, the defence budget is now being cut. But despite these

cuts, experts estimate that up through the twelvemonth 2005, we will pass at least

$ 250 billion a twelvemonth on national defence.

Social Security is yet a different narrative. Social Security has become

the anchor of the Federal Government. Every politician in Washington knows

that Social Security will finally fall, but really few will really suggest a

budget that cuts out Social Security wholly. For those who do, any such

program is changeable down instantly. Since its construct in the 1950s, Social

Security has done nil but grow, and this twelvemonth will be someplace in the

vicinity of $ 330 to $ 350 billion. If that & # 8217 ; s non plenty, it is projected

that by 2005, the plan will balloon to about $ 450 billion. That & # 8217 ; s a 28 %

addition in less than 10 old ages.

Medicare and Medicaid are besides Harijans in the federal budget,

although in Clinton & # 8217 ; s new program, he plans to cut the growing of both every bit.

While exact Numberss aren & # 8217 ; t available for Medicaid, Medicare is surging at the

same rate as Social Security. Right now, Medicare costs about $ 160 billion. In

ten old ages, it will turn at an dismaying rate up to over $ 270 billion. That is a

68 % growing rate. If this tendency continues, Medicare will make $ 500 billion

within 25 old ages. That & # 8217 ; s a batch of money for wellness attention.

As for the remainder of the money, the majority of it goes to plans such as

income security, wellness, instruction, and transit among other undertakings.

About $ 220 billion goes towards involvement we pay on the debt, and as our national

debt keeps lifting so will this figure. If the debt grows to the sum

predicted by Leon Panetta, Clinton & # 8217 ; s Chief of Staff, $ 6401 billion, or to the

size that some economic experts believe, in the surplus of $ 7000 billion, this figure

will surge higher and higher each twelvemonth.

As the earlier graph pointed out, our national debt is non traveling to

lessening by itself. What this state needs is a via media between Congress

and the President, no affair which President. Some experts feel that it is

necessary that we side with one party or the other ( ) .

Presently we have a Republican Congress and a Democratic President. This International Relations and Security Network & # 8217 ; T

traveling to assist do the state of affairs any easier. As a affair of fact, in recent

old ages the step of one-year shortage is determined reciprocally by the sum of

money that the authorities can plunder from the Social Security Trust Fund and the

Federal Employees & # 8217 ; Trust Funds plus 148 other trust financess. It has little or no

relationship to the financial direction of the authorities & # 8217 ; s functionaries. The more

trust fund money they can loot, the less the shortage will be, but the more

the debt will increase.

The best comparing that can be made to the national debt is an mystery.

If the authorities tries to diminish it, person is traveling to be huffy over what

plan is being cut. The more the authorities spends, the more people complain

that it is passing excessively much. There is no balance, and that is why it makes

elected functionaries so indecisive about their positions on the debt, they want to acquire

re-elected. One concluding idea, equilibrating the budget will extinguish the shortage,

but it will non halt the growing of the debt, and the debt is what we pay

involvement on, non the shortage. If there had been no shortage during the 1990 & # 8217 ; s,

the debt would still hold increased by $ 1 Trillion. Seem chilling? Obviously we

demand immediate action, with minimum spat.

Plants Consulted

Clinton Outlines Plan To Balance Budget By 2005 ; Melissa Healy ; Los Angeles

Timess ; June 14 1995

& # 8220 ; National Debt & # 8221 ; ; Encarta On-Line Encyclopedia 1996

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