U.S. National Debt
The U.S. national debt has reached an alarming
proportion. As it steadily increases, it's effect may not be
felt now, but it will be in the future. Paul Gregory and Roy
ruffin, in their book entitled Economics, linked deficits with
inflation in the long run (251). Demand-side inflation of this
type fails to increase the GDP, but instead just increases
prices. Continuous increases in prices do not benefit the
country or future generations. Also entitlements, such as Social
Secriuty and Medicaid, now engulf a large percent of the deficit.
Figures from the article "The Entitlement Quaqmire" (http://www.europa.com/~blugene/deficit/entitlements.html)
concluded that Social Secruity was the largest portion of the
entitlements, which total to around one-half of the budget.
While the older generations now benefit from this debt by paying
lower taxes and receiving these entitlements, the younger
generations will have to bare the burden of the debt run-up by
these exha!ustive expenditures without recieving any benefit from
them. With a future of inflation and indebtedness from which no
benefit for the payee was received, demonstrates the debt will have
an effect on the economy and not for the better.
Some may argue that the Keynsian approach of increasing the AD
by running a deficit is necessary. A liberal Democrat, Joe
Schwartz in his editorial(http://comemac4.bsd.
uchicago.edu/DSALit/DL/DL954#1) expresses this view of spending.
Schwartz comments that "any good moderate Keynesian knows that
without productive investment(that is, smart deficits), slow
growth will persist." He goes on to add that these debts can be
handled as long as the income of the nation grows faster than the
rate at which the debt grows. ...