Time for Action

            We are in the worst economic crisis since the Great Depression.  The economy is struggling greatly leading to government bailouts to save the financial system in America.  The money allocated for this and wars abroad have increased our debt at a much faster rate than normal.  Bad policies by creditors and companies pushed us into a recession.  Increased government spending and tax cuts may give us economic growth and help the economy immediately; however these deficits will increase our national debt even more.  After the economy recovers strategic spending cuts and higher taxes will be needed to give the government a budget surplus to keep the national debt at a sustainable level. 

            The national debt has pros and cons.  The national debt is a responsibility of the Bureau of the Public Debt.  This agency sells government bonds and securities to pay for the operation of the United States government; this agency is used to pay the interest rates of the debt and make full payments back to the investor (“Who We Are”).  A pro of the national debt is it makes the United States government a healthy investment.  By ensuring the money will be paid back to investors, the government is seen as a secure investment for people, companies, and organizations.  Without a debt the government would only be allowed to spend the money it has on hand.  This situation would not be wise in a crisis such as a war, natural disaster, or economic crisis.   So a maintained national debt is beneficial to America as long as the interest on it is at level that can be paid.  A con to a national debt is its extremely high level.  The national debt has increased dramatically in the last few years, fueled by growing wars abroad and bailouts in the dismal economy.  These types of causes will push us farther away from accomplishing our goal of a sustainable national debt.  An extraordinarily high debt will make it impossible to pay the interest and the government will not be seen as a secure investment.  When this happens the government will lose money from investors.  The government would then have to have a balanced budget with no extra spending.  This situation is not feasible if a war occurred or a natural disaster.  Both are impossible to plan the year before in setting the budget for the upcoming year.    However, in the current economy the debt might have to be increased before it can be lowered and sustained. 

            Increased government spending and tax cuts will put money back in the pockets of consumers and help turn the economy around.  This will increase the deficit and national debt but is a necessary short term step.  Consumer spending is down due to a reduction in disposable income.  Increasing the disposable income of Americans will help bring the economy out of a recession and make it more sustainable.  President-elect Barack Obama said he would create millions of jobs by setting up a program similar to Franklin Roosevelt’s New Deal.  This will give jobs to people who are otherwise unemployed and put money in the economy.  Moreover, tax cuts will increase consumer spending.  This will lead to a larger deficit but improve the economy; it will help rebuild some of the country’s infrastructure, which will happen with Obama’s proposed job creations.  Tax incentives for companies to keep jobs domestic will also hopefully lower unemployment which has reached 6.7 percent in November 2008 (“The Employment…”).  These steps are necessary to bring the economy back around before the deficit and debt can be reduced and sustained. 

            The steps to lower our annual deficit and help pay off portions of the debt and sustain it will be difficult.  These steps are only possible though in a growing and stable economy.  We have to lower spending as well as increase taxes to have a surplus after a budgeted year and pay some off some of the debt.  There is no way around this in stopping the extraordinary growth of the debt.  Once the economy is healthy again people will have more disposable income and some of this income has to be taxed at a higher rate.  It will be an unpopular decision but a necessary one.  This strategy needs to be accompanied with less government spending.  People who were employed with the new infrastructure jobs will be employed by normal companies at this time.  The program that was set up can slowly be dismantled, which will reduce spending.  Ending wars abroad would help greatly.  Spending 10 billion dollars a month in Iraq puts a huge strain on a budget.  If this is reduced a balanced budget would become a more likely goal.  A sustained national debt will make paying the interest and full amount to the investors easier.  There are many scenarios that cannot be planned and the national debt is there to help deal with these situations.  Under this plan though, the cost of one of these situations can be paid back with a surplus budget later.  These tough actions will be needed to take control of the deficit and debt.

             The bad economy and wars have forced us into looking at our spending and what we need to do about it.  We cannot continue to spend so much money without thinking about it.  The older generations are using our money for themselves and look how we are fairing.  What will our children suffer?  Increased government spending and tax cuts will bring our economy out of a recession.  Then strategic spending cuts and higher taxes will be needed to stop the dramatic increase of our debt.  This tightening on spending will only work when the economy is strong and can withstand the actions.  The goal has been set; it is up to us to get to it.  This is the time for action. 

Works Cited

United States.  Bureau of the Public Debt.  “Who We Are.” Bureau of the Public Debt: Who We Are. 3 Dec. 2008. 9 Dec. 2008.                                                                                                      < http://www.publicdebt.treas.gov/whoweare/who_we_are.htm>

United States. Dept. of Labor Statistics. “THE EMPLOYMENT SITUATION:  NOVEMBER 2008.” Employment Situation Summary. 5 Dec. 2008. 9 Dec. 2008.                                                                                                                  < http://www.bls.gov/news.release/empsit.nr0.htm>