Writing Contest: Second Place - Essay
A Balancing Act: Tipping the Scales in the American People's Favor
The United States economy is in a state of turmoil, due to the current recession and inflation of overall prices. There are many factors that could be blamed for the slowdown of our economy, such as the stock market, inflation, deficit spending, or the national debt. Although there are many causes of economic downturns, there is one that has the greatest impact on the economy, the national debt. In order to stimulate economic growth and end the current recession, there should be regulations in which the government has to at least balance the budget, if not have surpluses at the end of a fiscal year, in order to reduce the national debt.
Throughout the 233 years of our country, there have been more budget surpluses than deficits. It wasn't until the Great Depression and World War II that the federal government had multiple deficit fiscal years in a row. After World War II was over, the government continued to have surpluses in the good economic years and deficits in the not so good. It wasn't until Ronald Reagan was president during the Cold War that the United States government continually had deficits. It wasn't until 1998, under Bill Clinton, that the United States had a budget surplus. Although Clinton didn't reach a surplus until 1998, from 1995 he tried to at least balance the budget. During this time and also in the 1920s (before the Great Depression) and 1950s (after World War II), the United States saw long economic expansions with only short recessions. Just this simple observation shows that the United States economy fares better when there are budget surpluses.
Also, the interest paid on the national debt is the second-largest expenditure the government has to pay. Having budget surpluses will decrease the national debt, which will then decrease the interest paid on the debt, giving more money to the government to help pay off more of the debt. Using this logic, the national debt will be paid off faster than most economists think possible.
Additionally, due to the fact that the government wouldn't be borrowing money anymore, interest rates would go down, allowing people to take out loans and spend more money. This would help stimulate economic growth and help end the current recession. In essence, the national debt is the main factor in the continual deficits and current economic state.
To make sure the United States government submits at least a balanced budget, if not a surplus budget, Congress should implement a law that prohibits the federal government from spending more than it receives in revenues. Putting such a law into practice could cause many negative things, but the positive outcomes would far outweigh the bad ones. Results from this regulation could include inability to fund a war or provide financial aid after unexpected or natural disasters. Also, the government would probably increase taxes to provide them with higher revenues to help pay for such things. However, after the national debt declines, the government would need less money to pay the interest and taxes would once again be lowered. Also, once a war is over or a catastrophe contained, the government would once again lower taxes. Moreover, with less government borrowing, banks and other financial institutions would lower their interest rates, allowing people to borrow money when they need it. With increased spending from consumers, businesses will expand, more people will be employed, wages will go up, and the economy will be revived.
The solution to helping our economy is not more government spending and bailouts. Instead, it is the government's job to get rid of their debt and stop borrowing money. Once there is no longer any deficit spending, and the national debt is decreased or eliminated, our economy will function like a healthy heart, pumping money from consumers to producers in the form of spending and investing, and from the producers back to the consumers in the form of wages. A law that required a minimum of a balanced budget from the government would help start this chain reaction and inherently resurrect the United States economy.