A Nation In Debt

Essay by EssaySwap ContributorUniversity, Master's February 2008

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Suppose you needed to buy an expensive item, however you didn’t have the extra money to make the purchase, so you borrowed the money. When you are paying out more than you’re taking in, this is what’s known as a “budget deficit.” Since you borrowed the money, this puts you in debt, or state of owing money, to the loaner. On top of the debt you have interest, or the fee charged for letting you borrow the money. Simple right? Let’s keep going. Say you needed more money, so you borrowed more. You’re still not bringing in any more money, however you’re putting more money out, in other words this means your budget deficit is rising. Not only does this increase your debt owed, but the interest also rises. The higher the budget deficit, the more the debt grows. At some point the interest payment on the debt is bigger than all of the items in your budget.

At that point the only thing you can do is pay the interest, and you won’t have any money left for anything else. By this time you are approaching bankruptcy, or the state of being legally insolvent. What would happen if we applied this scenario to the nation? Amazingly enough, the government goes through this situation every day, and it continues to get worse. The national deficit is now approaching 6 trillion dollars (For an exact figure check out the Treasury Department’s web site, http://www.ustreas.gov, where the figure is updated daily). How can this be, you may ask? Right now Federal spending is greater than revenues, thus placing the nation in a continual state of debt. At this point the United States Treasury Department has spent over $360 billion on interest payments alone in 2001. Yes, that is our tax dollars. Let’s put...