America’s fiscal crisis is complex. Although the economy has always had its highs and lows, the recent subprime mortgage crisis, a $10.6 trillion national debt, and a growing unemployment rate are all indicators that America is in a recession. Though this paper may simplify the solutions needed to help the economy recover, they are based on sound economic principles.
The national debt is the most pressing issue. Debt builds when I spend more money than I make. A national debt is not something new for America, but the size of the debt is alarming. Since 1981, the national debt has increased by a factor of 10. So even in those times when our country’s economy was booming, the amount of our debt increased. Solid financial planning always includes debt management. Currently, America has failed to manage its debt. Fighting two wars overseas, funding unnecessary projects, and the reduction of manufactured goods in America have contributed to this debt. As debt grows, so does the amount of the interest payment. This makes paying off that debt more difficult, since much of the payment is going towards the interest. However, with a lot of diligence, perhaps in 30 years when my children inherit the economy, they will have a debt-free America.
Since many economists believe that this country is in the greatest economic crisis since the Great Depression, it is time America prioritized its spending to get itself on solid footing. This is perhaps the best way to reduce the debt. Cutting spending is never easy. The President will need to appoint some responsible people to evaluate our current spending and make the tough decisions on where to cut. In my own life, I’m not going to renew my season tickets for a professional sporting event if I don’t have enough money to pay my bills. In the same way, America needs to fund the essential programs for the well being of our citizens, while putting on hold those trips to other planets, developing new sophisticated weapons, or studying the mating habits of fruit flies. Although these and many other programs have value, they dwarf in comparison to Education, National Defense, cures for diseases, etc.
Once we get serious about cutting the excess, next America has to invest in herself. People need jobs and America needs improved infrastructure. The government could invest in public works programs to get people working while improving America. This is a much better approach than putting much of our current workforce on welfare because there are no jobs available. The worker then pays taxes back to the government. These taxes could be earmarked to help draw down the national debt.
Another category of public works is energy. America must free itself from its dependence on foreign oil. The government could invest in nuclear power, wind farms, and other alternate fuels. This would help keep our workforce employed while lowering our importing of oil. This in turn may also help to balance the current trade deficit. The more we invest in America, the stronger our nation will be.
It seems to me that in these tough economic times, that priorities need to be set and we must have the courage to follow them through. We must be wise with our spending and put on hold those programs that do not directly benefit mankind. Developing a car that flies or a creating a domesticated robot are worthwhile tasks, but should they be placed higher in importance than feeding our hungry?
If we refuse to see the danger of the high national debt, the value of our dollar will diminish. Our standard of living that we currently have will disappear and we will find ourselves second rate to the economic powers of the world. This is the time to have courage and make the tough decisions necessary to get America on solid financial ground.