United States Debt in Which They Are Responsible for
The United States deficit contributes to its debt and the debt contributes to the deficit. We know the longest running uninterrupted surplus for the Unites States was from 1920 to 1930 but spent most of it combating the war. This will show how the U.S. deficits, debt, and surplus affect the following areas; the taxpayers, future social security and Medicare users, unemployed individuals, University of Phoenix students, The United States financial reputation on an international level, a domestic automobile manufacturer (exporter), and a Italian clothing company (importer).
Taxpayers
This will show how the debt and deficit affects taxpayers. Taxpayers get caught up in the government debt and are left to pay it off. Individual debt is different from government debt, and the reasons for this are: (1) the government lives forever and people don’t, so the government is ongoing. When people die, all debts must be paid to old Uncle Sam before relatives get the reminder. (2) The government can print money and people cannot, and as long as another country accepts our currency, we can always exchange money with those countries. (3) The government owes much of it debt to itself. It is sort of like owing oneself so one will never go broke. The internal debt which is the debt owed to other governmental agencies or to its own citizens, and when it pays on its internal debt it involves a redistribution of the citizens but it does not reduce the income of the citizens. For example, say that a country has $3 trillion internal debt. Say also that the government pays $150 billion interest on its debt each year. That means the government must collect $150 billion in taxes, so people are $150 billion poorer; but it pays out $150 billion in interest to them, people in the country are neither richer nor poorer because of the debt (Colander 2010).
The external debt is debt owed to individuals in foreign countries and it is more like an individual’s debt (Colander
Taxpayers
This will show how the debt and deficit affects taxpayers. Taxpayers get caught up in the government debt and are left to pay it off. Individual debt is different from government debt, and the reasons for this are: (1) the government lives forever and people don’t, so the government is ongoing. When people die, all debts must be paid to old Uncle Sam before relatives get the reminder. (2) The government can print money and people cannot, and as long as another country accepts our currency, we can always exchange money with those countries. (3) The government owes much of it debt to itself. It is sort of like owing oneself so one will never go broke. The internal debt which is the debt owed to other governmental agencies or to its own citizens, and when it pays on its internal debt it involves a redistribution of the citizens but it does not reduce the income of the citizens. For example, say that a country has $3 trillion internal debt. Say also that the government pays $150 billion interest on its debt each year. That means the government must collect $150 billion in taxes, so people are $150 billion poorer; but it pays out $150 billion in interest to them, people in the country are neither richer nor poorer because of the debt (Colander 2010).
The external debt is debt owed to individuals in foreign countries and it is more like an individual’s debt (Colander
References: AARP (2013) http://www.aarp.org/content/dam/aarp/health/medicare_insurance/2012- 02/Medicare--and-Social-Security-Whats-at-Stake-AARP.pdf ABC NEWS Medicare and Social Security Will Run out Sooner Than Thought (2011) http://abcnews.go.com/blogs/politics/2011/05/medicare-and-social-security-will- run-out-sooner-than-thought/ Colander, D. C (2010) Macroeconomics (8th Ed) Boston, MA: McGraw-Hill/Irwin. Mohamed A. El-Erian 21 (December 2012) Retrieved from http://www.economywatch.com/economy-business-and-finance-news/risky-new- era-for-central-banks-and-monetary-policy.21-12.html Ostermiller, S. (2003-2013) The Currency Converter Retrieved from http://coinmill.com/EUR_USD.html Ohlemacher, Stephen (2012) Social Security surplus dwarfed by future deficit