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The Huge Trouble with Mass
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Emporia State University
In economics terms, the balance budget indicated an achievement that government’s income is equal to its expenditure. For example, a balanced budget occurs when the Federal deficit is $0. Taxes paid to the government equal to government spending. The government neither adds money to, nor subtracts money from, the economy. If state and local governments, businesses and private individuals do not add money to the economy, the total amount of money in the economy remains static.
In the other situation, when deficit occur, which is the situation that Taxes paid to the government is less than government spending, as the result, it required government to borrow the money to cover it. The U.S. government currently has this huge problem with a great amount of debt due to the deficit. This deficit was accumulated for a long time since 1970, in most years the government was spending much more than it took in. Nowadays, United States have amassed more than 10 trillion dollars in federal debt and another 42 trillion dollars in unfunded liabilities, nevertheless, baby boom generation will start to retire in the next few years. This means, U.S. government will spend more in Social Security and Medicare.
To resolve this huge problem, according to my opinion, U.S. government probably trying to increasing the tax rate, however, that is not for the entire U.S. citizen. This method is especially for those people who have high income, but the problem will be. Which income level can be considered as high-income level? What can be the appropriated rate for the new tax rate? Because according to the president candidates’ viewpoints, they will try to reduce the tax rate for those people who are in low-income standard and rise up the tax rate for people who are rich man. That might be a good method to relieve such a huge spends U.S. government bearing. To reduce the tax rate for those low-income people may cause the revenue the government makes from tax, but government can balance this gap by increasing the tax rate for those rich people. On the other hand, once the government decreases the tax rate, those beneficiaries might have more money to use, so that they could get independency from government. Since they have more money to support themselves, the government does not have to pay such a lot attention to those people. Finally, government could reduce the cost for these projects such as the social security, Medicare, the national health insurance.
Raising the tax rate might be a good way, but the fact is, since the baby boom generation are going to retire in the following years, the U.S. government also are facing another challenge due to the huge cost for this generation. This means the government has to rearrange the social security system so that they can make responsible for this job. For example, target the social security to who need it the most. Social Security does not have to provide extra income to those who are fortunate enough to be relatively well-off and are able to fund their own retirement. Furthermore, the government also has to re-think the social security system or try to change it. For instance, person should make a part of response of his future instead of depend on the government. They can make a saving account for their future retirement; the department of social security can manages their accounts, so that they do not have to worry about their account. Although it will create another amount of spending for the government to manage those future retirement account, compare with the enormous money if the government pays all of them, which could be another good way.
In this situation, to cut off some spending program also will be necessary, such as limit the spending in investment loan. Have more clearly report or plan for each one of their spending before the government makes decision, keep the government debt under control. On the other hand, the balance budget requirement might be make somebody worry that government will reduce the social security benefits, especially for their retirement benefits. However, the social security is a government program, it should undergo with government spending, and the fund for this program is from the tax turn in by the citizens. Otherwise, making a new program makes both citizen and government have problem in the future and will protect balance budget.
»A new report finds the main problem in getting the public to deal with our fiscal problems isn't opposition to tax increases or spending cuts -- it's their lack of trust in the government to spend their money wisely.