Marie Bussing-Burks - Deficit: Why Should I Care?

At the turn of this century, the American national debt stood at just under $6 trillion and the deficit at a mere $86 billion. Today, the national debt has topped $15 trillion, and the yearly deficit for 2012 is projected at a whopping $1.2 trillion. This new, second edition of Deficits: Why Should I Care? updates all the statistics, charts, and forecasts, while adding a new chapter on how global economies now, for better or worse, affect the U.S. debt and the annual budget deficit. It also includes a new appendix detailing how the U.S. political parties view the debt issue. According to the U.S. Treasury Departments Annual Report on the Public Debt, the debt is estimated to hit $19.6 trillion by 2015. The federal government has borrowed roughly 40 percent of its total budget for the last several years, a trend that could leave the U.S. in an economic crisis. Astronomical interest payments, a debt burden to your children and grandchildren, and an increased reliance on foreign creditors are just a few of the problems. Although the U.S. has experienced soaring unemployment, stagnant production, and a crippled housing market, foremost on many economists minds are rising deficits and ballooning debt. Others feel fears of the national debt are overblown or pale in comparison to todays economic problems. This clear, concise book will give you the need-to-know on the debt. You will learn: How to calculate deficits and the national debt The history of U.S debt and its recent unparalleled growth over the years How and why the government borrows money The economic arguments for, and against, accruing a debt Could we become like Greece if we dont cut our deficit? The impact of the debt on interest rates and inflation The impact of the debt on the value of the dollar and U.S. economic power This book also answers key questions: Can the government go bankrupt? Why have there seemingly been no repurcussions of the large debt to date and is that likely to change? When the interest on the debt becomes higher than the revenue of the government, what happens? And many more practical insights into the government debt controversy. Business professionals, parents, retirees, and students are all concerned about the debt. This quick read will provide an understanding of the ramifications of the rising debt and what the consequences may be. What youll learn Why the debt now could be a problem when people have been crying wolf about it for for the last 40 years How the world economy affects the U.S. debt and deficit What the government can do to reduce the debt and the implicationsespecially for such programs as Medicare and Social Security The long-term implications of the debt Methods and tactics for balancing the budget When accruing a debt makes sense and when it does not Action steps for monitoring the debt Who this book is for Deficit: Why Should I Care? is written for the busy business professional, concerned parent, retired worker, or student. While academic and theoretical texts on the subject lack brevity, this book will help you understand the seriousness of the debt issue in a clear, concise format. This work has been condensed into eight need-to-know chapters, each containing the key points necessary for understanding this complex economic issue affecting the economic future of all Americans. Whether you are a businessperson concerned about the economy, a parent anxious about the debt burden of your children and grandchildren, a retiree fretful about programs like Social Security, or a student who needs additional information to supplement a textbook, this is the book for you. The appendix provides a website selection covering government agencies, economic sources, and academic sites to assist you in finding the most up-to-date information on the debt drama. Table of ContentsIn addition to the new material (about 6,000 words), all statistics will be updated and more charts and graphs will be added to provide insight. Chapter 1. Crash Course on the National Debt This chapter delves into the role of the government in the U.S. economy. The government must provide certain essential goods and services for its taxpayers. In turn, the government collects taxes to pay for these goods and services. But when the government spends more than it takes in, a deficit occurs, and the government must borrow to pay for its overspending. This chapter takes a look at the budget process and the different types of budgets: balanced, deficit, and surplus. Chapter 2. A Huge Credit Card This chapter introduces the history of the debt and the issuing agency, the Bureau of the Public Debt. It examines details of the agencys financing instruments, Treasury securities, and savings bonds. Other main topics include the ownership of the debt, United States versus foreign, and interest payments, which hamper the governments ability to balance the budget. **NEW ** Chapter 3. Primer on the Current Global Economy Our Interconnected World --Policies and Events in One Country Affect Other Countries --The Impact of Weakening Economies on the U.S. --Trade Downturns --Declining Income and Jobs Potential Global Recession China: Long-term Slowing? European Debt Crisis --Spreading Financial Disease Across the Globe for Years to Come? Worlds Financial Markets --Unresolved Banking Crises --Periodic Stock Market Selloffs Economic Growth Key to Revenue Growth --Revenue Key to Managing Deficit --Earnings Stagnant Impact on the U.S. Budget and Deficit Chapter 4. Deficit and Debt Projections This chapter describes how the governments spending and tax policies influence output. The government has historically used fiscal policies to alter the macro economy, with some successes and some failures. We will look at an overview of recent fiscal policies, including the economic stimulus package designed to combat the December 2007 downturn, and impacts on the deficit and debt. This chapter introduces the rising debt compared with gross domestic product (GDP), considers the productive capacity debate, and provides projections on the debt trend. Chapter 5. Do Deficits and the Debt Matter? This chapter sets the stage for the debt debate. It was back in 2002, at a meeting of President Bushs economic advisors, that Vice President Dick Cheney said, Deficits dont matter, a viewpoint many politicians and economists have held for years. The deficit at that time was just $158 billion. Now some in Congress and many interest groups say deficits matter a great deal, and we must eliminate deficits and pay down the debt. others say no, we must spend in the face of economic hard times. NEW ADDITIONS FOR THE SECOND EDITION: Changing Demographics --Historical Overview of Social Security --Historical Overview of Medicare --Historical Overview of Medicaid Chapter 6. Deficits Do Not Matter This chapter focuses on the viewpoint that deficit spending is not a concern to the health of the U.S. economy. In fact, sometimes running a deficit contributes beneficial effects for the economy. Government spending supports the economy through building strong economic growth and more jobs. The federal governments deficit financing provides many essential services to society, such as national defense, education, public welfare, Social Security, Medicare, and Medicaid. In addition, the government sells Treasury securities and savings bonds to finance the debt. Not only are these important savings instruments for investors, but the Federal Reserve formulates monetary policy using government securities. A common view says that Treasuries can be issued continually to finance the governments needs, and it is not imperative to pay down the debt. The United States is not unique in its deficit situation. NEW ADDITIONS FOR THE SECOND EDITION How Deficits Help Other Major Economies Sidebar: Interview with a Leading Economist Who Favors Deficit Spending Chapter 7. Deficits Do Matter This chapter explores the concerns with deficit financing. It provides a deeper explanation as to why some feel the debt matters more now than it has in the past. You will be introduced to both the long-time arguments against deficit financingburden to future generations, hefty interest payments, crowding out of the lending, and economic instabilityalong with some new twists. The United States has an increased reliance on foreign creditors. China is now our number one creditor. Chapter 8. Get a Handle on the National Debt This chapter teaches the reader about government spending and ways to curb deficit spending. Pork projects impact government money spent in a particular locale and bring advantages to their political representative...