Then how did the situation worsen? Author Alanna Ritchie is a content writer for Debt. What makes U.
If the government cuts spending too much, economic growth will slow. Their costs, which currently account for 47 percent of all federal spending, are expected to surge as a percentage of GDP because of the aging U.
Most governments can safely finance their deficits instead of balancing the budget. Cutting spending has pitfalls. Government expenditures are the highest for Social Security, Medicare, Medicaid and national defense.
Understanding the National Debt Because debt plays such an integral part of economic progress, it must be measured appropriately to convey the long-term impact it presents.
Within a year, however, an economic recession led the government to start borrowing, and it would never again be debt-free.
The federal government owes this to other government departments. Congress could not finance the Revolutionary war with large tax raises, as the memory of unjust taxation from the British stood fresh in the minds of the American public. However, a few economists, including Nobel laureate Paul Krugman, maintain that some of the debt concerns are overblown and suggest that Washington still has decades to tackle the problem.