PCP: Balanced budget needed to help US economy

Kevin Griffin

This is article is part of a point/counterpoint. You can read the counterpoint here.


Tyler SpaughI’ve never taken out a loan in my life, but I’m already in $53,000 of debt.

Thanks to excess government spending, every man, woman and child in the United States currently has a share of $53,000 of our $16 trillion national debt, according to the U.S. Treasury.

If we wanted to pay off our national debt today, then you, me and every other legal citizen in this country would have to pay the government $53,000. But by tomorrow, our government would already have a new national debt of almost $3 billion.

The United States has the world’s largest economy, larger than the second, China, and third, Japan, largest economies combined. Yet we spend $1 trillion more than we take in in tax revenue.

Our government had annual tax revenue of $2.5 trillion last year. That’s greater than or equal to the Gross Domestic Product of every other single nation in the world except China, Japan, Germany and France.

The reason that the U.S. can rack up so much debt is because the U.S. dollar is the reserve currency of the world, basically the world’s most desirable currency.
As long as we issue debt in dollars, everything will be fine, because we’re the ones who print the dollars. This means that we always have the ability to pay off our debts, theoretically.

The problem is that the dollar is very close to losing its status as the world’s reserve currency, mainly because of our debt. If this happens, nations won’t want their debts to be paid in U.S. dollars and we’ll lose the theoretical ability to pay off our debts.

This will cause a flood of dollars held by foreign countries to pour back into the U.S., as these nations demand their debts to be paid in the world’s new reserve currency.

The flow of so many dollars into the U.S. system will cause the value of one dollar to plummet.

There is a way to remedy this problem, and it starts with balancing the budget. Before we can begin to pay off our debts, we need to stop the flood of new debt coming in at about $1 trillion a year.

Balancing the budget within the next 10 years is a good place to start. This will require a combination of slashing foreign aid and pork barrel spending, reforming Medicaid and Social Security, making small defense cuts and growing the economy through tax cuts.

 

Spaugh, a freshman accounting major from Winston-Salem, is an opinion writer.