budget deficit Essay -- essays research papers fc

"It's time to clean up this mess." Famous last words heard from the mouths of many different politicians when talking about the national debt and the budget deficit. Our debt is currently $4.41 trillion and we have a budget deficit of around $300 billion and growing. Our government now estimates that by the year 2002 the debt will be $6.507 Trillion. While our politicians talk of balancing the budget, not one of them has proposed a feasible plan to start paying down the debt. In the early days of our government debt was considered to be a last resort. In 1790, when Alexander Hamilton, as secretary of the Treasury, made his first report on the national debt of the United States, he estimated it at close to $70 million. After alternately rising and falling, the debt stood at only $4 million, or 21 cents per capita, in 1840. That was the lowest point ever reached by the public debt of the U.S. After 1840 it rose to a peak, in the last year of the Civil War, of almost $2.68 bil lion and a per capita figure of $75.01. The only justification for debt of any significant amount was a war. By 1900 this had been reduced to under $1 Billion. By 1919, the end of World War I, the debt had climbed to $25.5 Billion. In each of the following years the debt was reduced, and by 1930 stood at $18.1 Billion. With the collapse of Wall Street in 1929, the country (debt history: 1850 to 1950) fell into the Great Depression, which lasted until 1940. At that time the debt had climbed to $51 Billion. By the end of World War II the debt was $269 Billion. Again the government worked to reduce the debt, and by 1949 it was $252.7 Billion. At that point the Korean War started, sending the debt to $274 Billion by 1955. Since then, there has been no serious effort to pay down the debt. The main point to be made was that on three separate occasions a major debt reduction effort had been made, but in the past 55 years in spite of much arm waving there have been no similar results. The U.S. debt is divided into two major kinds of loans, marketable and no marketable. The former provides about 52 percent of the total and is made up of bills, notes, and bonds that can be traded; the latter includes U.S. savings bonds, foreign-government-owned securities, and government account securities that are redeemable but not tradable. Maturity of this debt ranges from less than a year to o... ... BIBLIOGRAPHY www.census.gov/foreign-trade/top/dst/2004 and 2003 and 2002/deficit.html The Cost of Borrowing. The Economist; Dec 15, 2004 Gale, William G. and Orszag, Peter R. The US Budget Deficit: On an Unsustainable Path. New Economy, Dec 2004. Gramlich, Gov Edward M., speech to the Isenberg School of Management Seminar Series, Amherst, Massachusetts, May 14, 2004; www.federalreserve.gov/boarddocs/speeches/2004/20040225/default.htm Griswold, Daniel T., Associate Director, Center for Trade Policy Studies, The Cato Institute, July 22 1998; www.freetrade.org/pubs/speeches/ct-dg072298.html www.investorwords.com/601/Deficit.html; WebFinance, Inc., 1997-2005 www.investorwords.com/5020/trade_deficit.html; WebFinance, Inc., 1997-2005 Eisner, Robert. How Real is the Federal Deficit? New York, The Free Press, 1986. Federal Reserve System. World Book Encyclopedia. Vol. 7, 67-68, 1988. Rukeyser, Louis. What's Ahead for the Economy: The Challenge and the Change. New York, Simon and Schuster, 1983. Segalstad, Eric V. Determinants of the Interest Rate. October, 1997. Sims, C., Comparison of Interwar and Post-War Business Cycles: Monetarism Reconsidered. American Economic Review, 1980.