Jeoffri Englis
P.3
AP Government-Politics
Issue Paper: Solving the Deficit
The issue faced here is that the United States is experiencing a national debt that has stretched to $14.6 trillion through budget deficits made by the government. This happened because the government cut taxes each year and spent more and more money especially during the times of the Iraqi and Afghanistan war. Several ideas on solving this problem have circulated among the Republican Party and the Democratic Party, but no real attempts to fix this have been made to restore the government to a healthier state. Republicans have talked about raising taxes and Obama have proposed a “spending freeze” to help finance for the future. The national debt has been caused mostly through spending for the war, but also through foreign holdings of Treasuries coming from foreign countries (such as China ($895 billion) and Japan ($785 billion)) totaling 3.9 trillion dollars. This problem has created economic distress because as spending of the U.S. decreases, the value of the dollar decreases as well.
The Republicans think that tax increases will help solve the deficit. Many Democrats criticize this because tax increases will only cause limitations on spending. Other Republicans believe that we should lower the inheritance taxes. This would apparently cause the deficit to decrease by $4 trillion instead of the current deficit of $14.6 trillion. Republican Senator says that tax cuts won’t lower the revenue. But in general, most Republicans have not focused on the issue and want to set it aside for a later time. Economists don’t believe that simply taxing the rich more will in the slightest lessen the gap of the government debt. Taxation would only make the spending decrease, which would eventually result in more economic decline since the flow of money will not flow with that of the economy. This is why many attempts to stabilize the deficit using this technique have failed because they have been set aside or, there have been allegations that the idea will only increase the deficit.
On the other side of the spectrum, the Democrats think that we should cut the spending and funding on the programs they currently are running on. Generally, the democrats are not interested in increasing taxes because they are about a big government. They have made claims that they should cut off trade with the main foreign countries like China and Japan, as well as make restrictions on which countries they borrow from. Nearly a third of the debt of the United States comes from borrowing which only leads to more and more debt problems because those loans would have to be paid off. But since we have no money to pay off the loans, we fall deeper and deeper in debt. This opinion coming from the Democrats is criticized deeply by the republicans also because they think the same result can happen: the deficit might increase instead of decrease like they assumed.
In conclusion, the Republicans think that in order to solve the deficit problem, they have to increase taxes and lower the inheritance taxes. The democratic side of the spectrum debates that instead, limiting the spending would fix the problem. Both parties argue on which plan on solving the deficit can lower the debt problem but neither has taken any serious action in putting the plan into effect without having made an agreement for it. All in all, the problem for solving the deficit has not come to a conclusion and the U.S. continues to spend money causing the debt to rise and rise each year.
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