Debt on U.S. Macroeconomy
Debt on the U.S. Macroeconomy
Karen McCarthy
ECO/372
October 14, 2012
Instructor, Shad Koros
Debt on the U.S. Macroeconomy Debt is accumulated deficits minus accumulated surpluses. Budget deficits are usually financed through governmental debt. Through the Treasury Department, the U.S. government must continually refinance bonds coming due by selling new bonds. Since 2001, the federal budget has been in deficit. The federal debt may not be the most important although it is referred to as the broadest measure of debt (Levit, 2010). Some of the debt is held by the so-called trust funds, primarily the one for Social Security. The unemployment insurance, federal employee pensions, and the highway trust fund are others.
Social Security Debt Social Security refers to the Old-Age, Survivors, and Disability Insurance federal program (Social Security Act, 1935). The U.S. Social Security program is the single greatest expenditure in the federal budget and the largest government program in the world (U.S. Budget, 2009). In 2003, the combined spending for all social security programs constituted 7 percent of the gross domestic product (GDP) and 37 percent of government expenditure (Feldstein, 2005). The Social Security program is currently responsible for keeping approximately 40 percent of all American seniors age 65 or older out of poverty (Sturr, 2007). Retirement benefits and Disability Insurance (DI) are two types of benefits provided by the Social Security program or the Old-Age and Survivor Insurance (OASI). Retired workers and his or her spouse and children are eligible or receive retirement benefits. On the same basis retirement benefits are determined, Disability Insurance provides benefits for disabled workers (Schieber, 1999). Individuals have the belief that the Federal Insurance Contributions Act (FICA) taxes are placed in an account at the Social Security Administration in his or her name. In fact, these funds arrive at the U.S. Treasury and are
Karen McCarthy
ECO/372
October 14, 2012
Instructor, Shad Koros
Debt on the U.S. Macroeconomy Debt is accumulated deficits minus accumulated surpluses. Budget deficits are usually financed through governmental debt. Through the Treasury Department, the U.S. government must continually refinance bonds coming due by selling new bonds. Since 2001, the federal budget has been in deficit. The federal debt may not be the most important although it is referred to as the broadest measure of debt (Levit, 2010). Some of the debt is held by the so-called trust funds, primarily the one for Social Security. The unemployment insurance, federal employee pensions, and the highway trust fund are others.
Social Security Debt Social Security refers to the Old-Age, Survivors, and Disability Insurance federal program (Social Security Act, 1935). The U.S. Social Security program is the single greatest expenditure in the federal budget and the largest government program in the world (U.S. Budget, 2009). In 2003, the combined spending for all social security programs constituted 7 percent of the gross domestic product (GDP) and 37 percent of government expenditure (Feldstein, 2005). The Social Security program is currently responsible for keeping approximately 40 percent of all American seniors age 65 or older out of poverty (Sturr, 2007). Retirement benefits and Disability Insurance (DI) are two types of benefits provided by the Social Security program or the Old-Age and Survivor Insurance (OASI). Retired workers and his or her spouse and children are eligible or receive retirement benefits. On the same basis retirement benefits are determined, Disability Insurance provides benefits for disabled workers (Schieber, 1999). Individuals have the belief that the Federal Insurance Contributions Act (FICA) taxes are placed in an account at the Social Security Administration in his or her name. In fact, these funds arrive at the U.S. Treasury and are
References: Social Security Act of 1935 "Legislative History 1935 Social Security Act". Retrieved November 8, 2006. Feldstein, M. (2005). Rethinking social insurance. American Economic Review, 95(1), pp. 1–24. Orr, D. (November – December, 2004). "Social Security Isn 't Broken: So Why the Rush To 'Fix ' It? In C. Sturr & R. Vasudevan (Eds.), 2007, Current Economic Issues. Boston: Economic Affairs Bureau. Schieber, Sylvester J., and John B. Shoven. The Real Deal: The History and Future of Social Security. New Haven: Yale University Press, 1999. Laxton, D., and P. Pesenti, 2003, “Monetary Rules for Small, Open, Emerging Economies,” Journal of Monetary Economics, Vol. 50, pp. 1109–46. "Monthly Statement of the Public Debt of the United States." The Bureau of the Public Debt - Treasury of the United States of America, December 31, 2000.