Deficit Spending: Not Just for Hard Times Anymore

This article is very interesting because it talks about the US increasing their deficit while being in a positive economy.  It was believed that the deficit would be expected to increase if the economy was in a bad state and unemployment was high, but we are not currently dealing with those things, yet the deficit is increasing.  The budget deficit is as $779 billion and by 2020, at this rate, the deficit will be at $1 trillion and $1.3 trillion by 2022.

This would be a great time to spend paying off debts, to lower the deficit and prepare for when the economy will drop again and the government will need to actully borrow to help the economy.  The last time we were in a surplus was during Bill Clinton's time and before that, 1969.

Higher debt means higher interest rates which is bad for everyone.  The higher interest will raise the deficit even more and make it more expensive for the government to pay for programs as the interests continues to hike up the national debt.  As for consumers, this will raise interest rates for credit cards, mortgages, car loans and worst of all, student loans. 

There have recently been a lot of tax cuts which were supposed to free up more money and promote spending in the economy to eventually help the budget deficit, but there have not been much result of this so far.

Government programs are also helping increase our debt because they are becoming more expensive overtime.  People are living longer, so they are using more health insurance.  Social Security is also a problem looking at life spans and retirement ages.  Some people have proposed to cut government program spending or re-adjust them, but that is very difficult and nobody in office can fully agree on how to change these programs.  It has also been proposed to cut spending on national parks, housing programs and federal prisons, but that also can be problematic and Democrats and Republicans are having a hard time agreeing on what to do next.

This is a large problem that has gotten worse overtime and it is too bad that we are not using this time in our economy as a time to pay back some debts because what goes up must come down.


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