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Saturday, August 13, 2011

Economic Journal Article #3

Here is my third economic journal article from ECO 202: Macroeconomics. Published with permission of Professor Noreen Van Valkenburgh.

Title: Obama: "Real Differences" remain on Debt Deal
Date: July 5, 2011


President Obama said today that Republicans and Democrats are working towards a deal with the debt ceiling deadline fast approaching. He said that the Democrats agreed to tens of billions of dollars in concessions in exchange for Republicans allowing certain other programs to stay. The deal apparently needs to have some basic framework laid out by around July 22 to avoid massive economic and government chaos.

My reaction:

Both sides' reactions are far less than sufficient. Our national debt is about $14.5 trillion and the deficit for the last year alone is roughly $1.5 trillion and rising rapidly. $10 billion in reductions won't come anywhere close to lowering the debt. It will lower the deficit by about 0.6%, which is not going to help much at all. And the debt will still continue to rise and this country will fall worse into financial turmoil. Eventually, other foreign nations are going to demand payment on the money we owe. And unfortunately, we don't have the money. With Medicare essentially acting as a pyramid scheme with the younger investors (taxpayers) paying the older ones' profits, and social security functioning the same way, the problem is only getting worse. Not to mention the wasteful government spending on wars in Iraq and Afghanistan, and bombing targets in Libya and Pakistan, plus the defense budget almost the size of the rest of the world's combined. We need to reduce government spending far more drastically than either side is willing to do. The problem is, politics is a business. And no politician wants to be accused of cutting "Hundreds of billions dollars of government services" even if those services either are useless or could more efficiently be handled by private and/or local authorioties. Any politician that agrees to massive cuts stands almost no chance of being reelected. That is, unless a libertarian/Tea Party movement sweeps the nation and the government is significantly downsized and spending massively reduced. If that does not happen in the next few years, the great nation of America will fall from glory to shambles.

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