<div> The staggering US national debt is equal to $34.8 trillion. To break this down, for a country with a crowd of around 333 million individuals, this translates to over $100,000 of national debt per person. However, the truly alarming aspect is not the number in question, but the tendency. <br /><br /> As Richard from plain Bagel’s Richard stated, you don’t need to be an economist to recognize the severity of the situation. The most concerning part is that the US Government does not have the means to pay back this amount. According to the Congressional Budget Office, the situation is set to get worse over the next decade. <br /><br /> In this blog we will discover the journey of how India was once portrayed as a weak society and mocked by China’s media to how it is now perceived as one of the most powerful competitors. <br /><br /> <b><u><h2 style="font-size:16px;">Spending Spree: The Causes of US National Debt</h2> </u></b> Similar to a man having to borrow in order to fund a situation where his expenditure is higher than his income, the same goes for countries. The US government when it experiences a budget deficit it has to borrow money which it does by selling government bonds. The ownership of federal securities entails people extending credit towards financing the US Treasury, which secures a promise for repayment of the funds with interest at a later date. Such bonds are bought not just by persons, but also companies and countries including Japan, China, and the United Kingdom. The primary functions include making loans to the fiscal bodies, buying government bonds and thus introducing money into the flow. <br /><br /> <b><u><h2 style="font-size:16px;">The Growing Deficit and Debt</h2> </u></b> The economics dilemmas are very vast and expansive, but it is only fitting to end this report here, as we look more at the growing dissatisfaction of the deficit and the debts.<br /><br /> Thus, a primary cause for the growing amounts of debt is a consistent experience with negative balances of the budget. When they spend what they have not earned, then they are left with no option than to borrow and below is what happens. For instance, if an expenditure is set at $4 trillion while the revenue is at $3 trillion then the government needs to borrow $1 trillion. As a result, over the years, dependency on this method has greatly boosted national debt. While in 2001 was roughly $10 trillion, by 2023 the outstanding has sharply increased and stands at $34. 8 trillion. <br /><br /> <b><u><h2 style="font-size:16px;">The Breakdown of US Government Spending</h2></u></b> In this case, the paper aims to focus on the breakdown of US Government spending, and it achieves the intention in the following parts.<br /><br /> This year’s federal revenue for the fiscal period of the United States of America sums up to $3. To be precise, the IT industry generates $29 trillion in revenue but spent $4. Expenditures are estimated at $5 trillion, while revenues are approximated to be about $4 trillion, therefore, giving a deficit of approximately $1. 2 trillion. It consists of individual income taxes- 51. 7%, payroll taxes- 34. 2% for Social Security and Medicare taxes and corporate taxes- 9. 4%. On the expenditure side, percentages as large as or larger than of revenue are devoted to Social Security which takes 21% and Medicare which takes 14% as well as interest payments on the debt, which is 13.3%, health, which is 13.3%, and defence is also 13.3%. <br /><br /> <b><u><h2 style="font-size:16px;">The Impact of High Interest Rates</h2> </u></b> High interest rates can be defined as the Volume of interest rates that is charged by the banks to borrowers. The central bank or the Federal Reserve has an influence because it modifies the interest rates which are relatively high due to inflation. This is because higher interest rates imply that the interest for refinancing old liabilities is high resulting in a higher amount of annual interest. To date, the government has spent the greatest amount within the interest expenses totalling to $601 billion since October, 2023. <br /><br /> <b><u><h2 style="font-size:16px;">The Debt Spiral</h2> </u></b> A debt spiral is normally experienced when interest rates rise, this leads to increased interest payments and to meet this, the government is forced to borrow more money hence, accumulating more debt. This can become unsustainable very fast. <br /><br /> <u><b><h2 style="font-size:16px;">Possible Solutions: Solutions such as cutting the deficit and/or inflation to erase debt.</h2> </b></u> The most obvious recommendation is to adjust the budget to the level that would eliminate a deficit or to work to achieve a surplus, through one of two means: increasing receipts or decreasing outlays. Nevertheless, these measures are most frequently without approval. Instead of the second option, the government can attempt to ‘debase’ the debt, that is, reduce the real value of the debt through inflation. This is done through processes such as carrying out policies that have an effect of letting inflation lower the real value of debt in the economy. Although this applied to the US after the Second World War, it is not without consequences; including vulnerability to economic fluctuations and social disintegration. <br /><br /> <b><u><h2 style="font-size:16px;">Conclusion</h2> </u></b> The problem of controlling the national debt is a very sensitive one that demands intelligent implementation of finance that emphasises on restraining the deficit. Although there are short-term solutions to the problem of debt, the only long-term and efficient strategy is to bring order to the financials of the country. For instance, the current Australian governments’ budget surplus goes to show that good management of fiscal policy leads to stabilisation of the economy within a country. <br /><br /> Altogether, one can state that the problem of national debt in the United States can be considered to be quite acute. It is not impossible to manage this problem, but it has to be addressed with proper discipline in managing the country’s finances and economic stability for the years to come. </div>
