Posted: December 2nd, 2013
Fiscal Administration 5
America is faced with the worst fiscal challenge. The fiscal challenges threaten the future of the country and consequently the quality of life those future generations. The country is faced with enormous budget deficits and the public debt stands at 14 trillion dollars. In this sense, the country seems be on its way to bankruptcy. Worse still, the country’s spending patterns are not bound to end any time soon. This will only increase budget deficits in the future and the public debt will continue to grow. It is time that the government reconsiders their budget policy lest the country falls of the ‘fiscal cliff’. The time to initiate fiscal changes is now. While such a move will meet several challenges, cutting spending is the one choice of action that may restore the balance in the country’s budget. However, whatever the choice of action, it must rationally address the fiscal crisis America is facing. The country needs to adopt a budget philosophy that will revamp the economic situation in the country.
An effective budget policy that the country should adopt is an annually balanced budget. This is a situation where the government budget policy aims at equating the government spending with the revenue collected (Lee et al 134). In this sense, the government should only use what it has. However, this may meet various challenges that may make it difficult to achieve. For one, the government needs to continue increasing spending despite the fact that revenue coming in is not enough to sustain the spending. This is because that there are an increased number of people depending on government support to sustain their living. Therefore, cutting spending may hurt the economy more that help it.
The challenges faced by cutting spending may mean that the budget may not allocate enough for public services such as health an education. Over 55 million Americans receive Social Security benefits. In addition, 50 million of these Americans are on Medicare and about 42 million of them are retired and include their dependants. Again, the notion of ‘Baby Boom’ of those born between 1947 and 1964 reached the retirement age in 2011. In the years to come there is going to be very many retired individuals in America affecting the tax collected on income by the American government. The challenge of cutting spending will mean that this population and the dependants will suffer. To save this situation, borrowing is not an option since the public debt is already high and increasing taxes on the working population may witness a revolt from them.
Despite these challenges, a balance budget is the best way out. However, some may argue that it is too late for that since doing so will mean cutting spending and increasing taxes to sustain government programs. This may lead to an economic down turn where people have a reduced purchasing power (Lee et al 59). This may lead to business failures in both corporate and small businesses. Therefore, they would propose that the people weather out the situation and hope for the best in the future. Before the option of cutting spending and establishing a balanced budget is dismissed, the country needs to understand the effects of ignoring the fiscal crisis and letting every thing fall into place. Things may never get better if nothing is done. Therefore, it is necessary to understand where the country stands now and where it will be when the government budget indicates that spending has been cut and an attempt to balance the budget will have us. This situation may create more problems for the country, but the people need to understand that this meant to ensure the existence of the Union in the future.
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