Monday, February 28, 2011
Economists' biggest worry: Federal budget deficit
This is a good article centered around the mass concern that american economists have about the US budget deficit. The general consensus among these economists is that we are keeping taxes far too low and spending way to much to emerge from the recession, politicians say our system is still too weak to raise taxes or cut spending. Either way, without action we may need major reform in our economy to correct the budget problem
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5 comments:
One good thing that i see from this article is the fact that these economists dont believe there is much risk for a double-bip recession. This information is crucial in boosting consumer confidence within markets. Since our economy is driven by consumption this is very important. As consumer confidence climbs, so will the strength and real growth of our economy as a whole. The end result will be a stronger economy that will then be in a position to raise taxes and cut spending, utlimately paying off our unpecidented defecit.
i agree with timothy, i think that we need to take action now before the problem gets worse and we end up in a deeper debt situation. if the government continues this out-of-control spending then we might see a sharp decrease in the value of our currency over time.
Following up on what Tim and Mason said, the devaluation of the dollar considering how much the United States imports would extremely worsen the deficit. The government spending has to be more efficient. Many different government programs overlap and the large government spending will hurt the economy if the government doesn't start allocating funds more efficiently.
Devaluation of the dollar would be a disaster consequence if we don't do much with the Federal budget deficit. It would significantly make the standard living expenses more expensive if it would to be devalued. This would lead to more exports if we were to need foreign currency to balance the budget as well as the value of the currency.
Also, I am wondering whether there is a possibility of the dollar being dropped as the international currency and be replaced by some other foreign currency.
We spend over $60 billion a month fighting wars in Iraq and Afghanistan. That's around $800 billion a year and many estimates have total defense spending closer to $1 trillion. The U.S. spends more than the next 15 countries combined. Is this necessary? Are we all that much safer because of this excessive spending? Probably not.
Military spending by the U.S. government accounts for about 30% of the federal budget and around 4.7% of total GDP. We expect higher military spending during war-time but this sort of spending seems to be crippling our economy. This article shows how troubling the federal deficit is, curbing military spending should be one of the main concerns.
Osama Bin Laden knew he couldn't defeat the U.S. militarily, so one of his main goals was to force the U.S. to spend itself into oblivion fighting terrorism. It's not too late to prevent this from happening.
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