American Deficit

According to an article that I read the government deficit for 2004 was a record high of $480 billion and is estimated to go up to $1.4 trillion over the next decade. What are we going to do? In my opinion I think that the government is not alone when it comes to deficit. There are millions of Americans who spend more than they make. Many Americans buy houses and cars they cannot afford and are so far into debt they can't see out. So what do these people do? They take out bankruptcy. How are these people getting so far into debt? Why don't people just buy things that they can afford? Same goes for the government. I can understand some of the government debt is very legitimate, but $1.4 trillion, for what?


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Ava said...

I think that you are on the right track, but I can see people going into debt when they buy their home. That is a necessity and so is a car, but not a Hummer or a 10 bedroom house for 3 people is not.

Dr. Tufte said...

-1 on Taylor's post for a bad link.

Taylor: try to make the text of your link more informative next time.

How does this relate to ManEc?

Here are two points from a macroeconomist.

1) The deficit will balloon because it is measured in nominal terms. It's next to meaningless. My income is going to balloon over the next 10 years too - but that doesn't mean I'll be able to buy more.

2) It isn't reasonable to use the same view towards individual or household debt, and debt incurred by governments or corporations. The latter are not going to die with certainty. This makes their debt much less problematic, since there just isn't a sense in which they need to pay it back by a certain point or go to probate court.

Morgan said...

I can understand some debt, but I feel that the United State's current financial status is ridiculous! There are some principles that are golden, and thrift is one of them. As it pertains to individuals, when people decide to spend lavishly, it is indirectly at the expense of society as a whole. When people file for bankruptcy, creditors fail to receive what they are owed, and ultimately transfer those costs to everyone else in the form of higher prices, and higher interest rates, etc. People need to start spending less than they make, and start saving. As for the nation's deficit, the same should be true. Acquiring more debt isn't helping our country to fare any better, so where is all this money going?