Balanced Budget Essay Research Paper Balanced BudgetThomas

Balanced Budget Essay, Research Paper

Balanced Budget

Thomas Jefferson stated, “I place economy among the

first and most important virtues, and public debt as the

greatest of dangers. To preserve our independence, we must

not let our rulers load us with perpetual debt” (Grinsburg

1). This quote illustrates the importance of maintaining a

balanced budget; therefore, it is necessary to stand firmly

resolved that the government should balance its budget.

Three main arguments uphold this premise. They are as

follows: 1. It is feasible for the government to balance the

budget, 2. A budget deficit harms the United States through

creating a trade deficit and increasing the national debt,

3. A balanced budget would benefit the United States by

providing extra funds for social programs, tax cuts, and

reducing the national debt.

Argument 1: It is feasible for the government to balance its

budget

On of January 7, 1998, the U.S. Congressional Budget

Office released a budget forecast that “shows the federal

budget to be in effective balance, with a projected deficit

of just $5 billion this year a trivial percentage of an

estimated $8.5 trillion gross domestic product” (Bartlett

8). The government was able to balance the budget without

causing negative complications. This balance came absent of

any significant tax increases and/or government cuts in

spending. Because the United State’s economy has been

relatively productive in the past few years, the government

was able to balance the budget through an increase in tax

revenues. During this time the government was actually able

to increase its spending somewhat, while the American people

were free from additional tax burdens. In fact, according

to the U.S. Treasury Department, “federal revenues are up

10.5% over the same period a year earlier, while spending is

up only 3.8%” (Bartlett 6). Essentially, this shows that it

is not only possible for the government to balance its

budget, but it can also be done without negative

consequences. Maintaining a budget deficit, on the other

hand, drastically hurts the stability of the U.S. economy.

Argument 2: A budget deficit harms the United States through

creating a trade deficit and increasing the national debt

Almost everyday on the news one hears something about

the Federal deficit and the U.S. budget problems. Currently,

the Federal deficit is over five trillion dollars, and that

divided out among the U.S. population equals over nineteen

thousand dollars per person. This enormous debt couldn’t

have been created overnight. The government’s failure to

balance the budget resulted in both the large trade deficit

and large national debt.

First, the government needs to focus on the trade

deficit. Lowering the budget deficit will help the American

public with national savings which, in the long run, will

rescue the trade deficit. “The ballooning federal deficit

had cut national savings far below the nations investment

needs. As a result, the U.S. had to import capital from

overseas, which inevitably resulted in a trade deficit”

(Koretz 1). The main point of all this is that private

savings is down, and needs to be brought back up. “Thus,

while the public sector’s saving performance has improved

mightily in recent years, America’s household savings rate

has plummeted to its lowest level in 39 years leaving the

U.S. still highly dependent on foreign capital (Koretz 1).

Another key point to this issue is high foreign debt. By

1997, the U.S.’s “net foreign debt was more than 1 trillion

and was increasing at an annual rate of 15 to 20 percent,

with Japan owning almost $300 billion and China more than

$50 billion in U.S. treasury bonds” (Huntington 28).

Eliminating this foreign debt would be another good step in

the right direction for the U.S. government.

The second obstacle is that the national debt is

troublesome. The national debt and interest payments mean

higher taxes. The interest on this debt is growing

everyday, and something needs to be done so taxes don’t keep

getting higher to pay for it. “Today, the government must

spend 40 cents of every personal income tax dollar to pay

interest on the national debt” (Ginsburgh 1). If 40 cents

doesn’t blow your mind, then maybe the billion dollar

figures will. “Gross interest on the debt will continue to

rise substantially over the next 5 years from $360 billion

in 1997, to $412 billion by 2002, and by 2007 just the

interest on the debt is projected to be $483 billion This

$493 billion is just $50 billion shy of our entire

discretionary budget for the current fiscal year” (Hatch

S1152-1187). These numbers are unimaginable for most U.S.

families. You may wonder how does something like this even

begin to happen. Let’s break it down even more. The U.S.

national debt stands at over $5 trillion dollars, and that

translates into over $19,000 for every man, every woman, and

every child in America. The debt of an average family is

more than $72,000. That is more than the average family

income in America. You think its bad on family, what about

the young minds of American bringing us into the 21st

century? “For many young adults who are taking advantage of

student loans to obtain a better education, the national

debt can ring up $2,200 in additional costs on that loan”

(Hutchinson S985-988). The elected officials in office need

to focus harder on these topics and quit shoving them out

the back door of the capital.

Even worse, the demographics of the U.S. are changing

drastically. People are living longer, putting an even

larger burden on the entitlements. Along with this, the

number of working taxpayers will decline when the ‘baby

boomers’ reach retirement. This will mean fewer revenues

for the government, making the situation worse. Something