Question

In: Economics

You have been hired as an economic consultant to your state’s US Senator or Congressional Representative....

You have been hired as an economic consultant to your state’s US Senator or Congressional Representative. Your first assignment is to prepare a brief about the US federal budget and the national debt. There are several issues you are expected to cover in your brief including, but not limited to, the following: Describe the recent trend (approximately during the last 20 years) that is occurring with the federal deficits and the national debt in the US. What were/are the primary drivers of the federal deficits and the rise in the national debt? Who owns the US national debt? In your opinion, should we worry about the national debt? What consequences would a large and growing national debt have in the long run? What are the policy options for dealing with the skyrocketing national debt?

Solutions

Expert Solution

The U.S. public debt is more than $26 trillion.1 That's more prominent than the yearly monetary yield of the whole country.2

The U.S. started making a beeline for a debt default after dangers to not raise the debt roof and the U.S. debt emergency in 2011. It proceeded with the "monetary precipice" emergency in 2012 and government closure in 2013. While a debt default presently can't seem to occur, the public debt keeps on arriving at exceptional levels.

The debt-to-GDP proportion gives knowledge into whether the United States can cover the entirety of its debt.

A mix of downturns, safeguard spending development, and tax reductions has raised the public debt-to-GDP proportion to impractical levels.

The United States can't stand to default on its debt without major worldwide financial results.

The rising debt is concerning and its very difficult as per the economist to reverse this trend given that the interest rates are already touching 0.


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