The U.S. National Debt Essay

1080 words - 4 pages

"I place economy among the first and most important of republican virtues, and debt as the greatest of the dangers to be feared." -Thomas Jefferson, 1817The United States National Debt has now passed 8.8 trillion dollars. This is more than $29, 000 for every person in the United States. Since federal law limits the total amount of debt the Treasury can assume, Congress has raised the debt ceiling to $9 trillion dollars. Sadly, the national debt is actually our "nation's debt", although the federal government got us there, we the American people will have to pay it back.At its current rate of spending, the federal government will soon build up $1 trillion of new debt each year. The issue is simply that congress almost always spends more then the IRS is able to collect in revenues. Over the past three years there has been a huge rise in federal spending, to the extent that the debt has increased an average of $1.6 billion per day since September 2003. As amazing at it is, the government spending will most likely exceed its limits in the year 2005 therefore making our nation even more vulnerable.Unfortunately, these increases have become so common that the media hardly reports them and there are no political costs for those who vote as such. When the national debt is carelessly enlarged it suggests to investors that the government is not genuine about controlling its spending. If investors should become leery, they may be hesitant to purchase from our government in the future.Treasury notes sold by our government are by and large purchased by foreign governments; mostly Asian. Currently banks have begun to favor foreign assets showing they believe our economy is headed for trouble. Even more disturbing is the fact that we are essentially at their mercy. Should foreign governments choose not to purchase from us any further our economy would suffer greatly. In effect the debt destroys our independence, because the American economy now depends on the actions of these foreign governments. If the Federal Reserve had to raise interest rates to the levels of the 1970's so as to entice foreigners to buy government debt, our already delicate economy would further deteriorate.Being that we are in debt, obviously we must pay interest on our dues. In 2004 the government paid $322 billion dollars in interest. Startlingly, almost half of all individual income taxes are required just to pay the interest on the federal debt. We the American people work longer and pay more for taxes than we do for food, housing, and clothing. As long as the government continues to spend more than it receives, they must raise taxes, print more money, or borrow funds.The national debt takes funds out of businesses that could have been invested into job creation and entrepreneurial development. It also reduces funds from consumers, which could have been used for the purchase of goods & services. Our hard-earned money is used to pay interest on the debt, which is just like making a...

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