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