National Debt Levels

If you live in the United States and keep just one eye on the news from time to time you are probably well aware the country is in debt. Not only is this a popular news stories, but there are many websites devoted to the subject as well as a movies and documentaries. Is this a big problem from an economic point of view? Yes, it is important, but it appears that those “in charge” are not overly concerned. Instead, they are letting the national debt grow and grow. Soon enough it may be out of control.

Since September 2007, the national debt in the United States has increased an average of $3.8 billion per day. Yes, that is per day! So you can see just how easy it is for the debt to grow to new levels?

So what is the USA national debt level at this time? Currently, the number stands at roughly $12 trillion. For most of us, this number is so big we have never even seen it written on paper.  It is an exponentially vast level of debt and growing. In fact the number is so large that the national debt clock in Mid Town Manhattan had to remove the dollar sign when the national debt went from $9 trillion to $10 trillion in order to fit in all the digits that were required.  Here is a news clip on this national debt news story.

The number one reason for this debt is the increase in government borrowing. The more money the United States borrows, the more they will have to pay back in the future. Just like consumer debt, national debt grows exponentially over time. The only difference is that the USA national debt involves larger numbers.

Who are we in debt to? This national level of debt does not include the debt of local and municipal governments. The debt is the debt liability of the country or tax payers to lenders within this country and to lenders from abroad, internal and external debt. The US Government borrows by issuing securities, government bonds as well as bills or creating more money supply.

What are the problems associated with government borrowing? Some of them include destabilizing the private sector, and higher interest rates, which are meant to attract new lenders.

Fortunately, it appears that the recession has beaten some sense into both private households and companies. In 2007, total debt for the United States, including both private and public sector, grew at a rate of 10 percent. Now, this number is down to a three percent debt growth rate. The reason for this is that most people and organizations finally saw how much debt they were facing. And with the economy weakening, more and more people were interested in paying off debt as opposed to taking on more.

The national debt by the United States government is a different story.  It will be interesting to see if the government continues to borrow and spend, or finally begins to cut into this debt.  This article is written by staff of Credit Creator.com.

On April 23 President Obama met with top ranking officials from 14 credit card companies to let them know that their days of preying on consumers are over. At this time, he is working fast with other members of his party to push legislation that will prevent credit card companies from increasing interest rates for no reason.

Of course, there are some who feel that this is not the best thing to do at this time. With the weak economy some experts feel that cracking down on credit card companies is only going to make things worse. The pros and cons are sure to be discussed many times over as the next few months unfold.

National Economic Council Director Lawrence Summers has been doing a lot of talking on the president’s behalf. Recently, he said Obama was “going to be very focused, in a very near term, on a whole set of issues having to do with credit card abuses, having to do with the way people have been deceived into paying extraordinarily high interest rates that they wouldn’t have paid if they knew what that they were getting themselves into.”

The Financial Services Committee has already approved the legislation, 48 to 19, which Obama spoke about on April 23 with credit card officials.

It shouldn’t be a surprise to anyone, including the credit card companies, that this is happening. For many years they have been taking advantage of consumers by disguising the amount of interest they were paying or suddenly increasing interest rates without proper notification. It appears that Obama and his team is taking the side of the American people in this battle. Keep an eye on the news for further updates.

There is no denying that the credit crisis in the United States is serious. In addition to effecting millions of individuals, this situation has caused issues with businesses all over the country as well. Of course, this is not to say that the government is sitting back and hoping that things get worse. They are looking for ways to fix the credit crisis, and have already taken some steps such as cutting key interest rates to record lows.

There are many opinions as to what the government can do in order to fix the credit crisis and better the economic state of the country. That being said, not every move is an easy one to make. Remember, fixing one thing can lead to issues in other areas so the government needs to be very careful about the choices they make.

Many people are of the opinion that fixing the credit crisis can be done by removing all capital gains tax. This is a drastic measure, but this is something that should definitely be considered if the government is serious about implementing policies that will bring the country back on track. By cutting capital gains tax investors from all walks of life will begin to put money into real estate and the stock market. Why would they do this, you may ask? Simply put, they will want to seek out tax free profits in order to put more money in their pocket. In the meantime, they will be doing their part in repairing the credit crisis and stimulating the economy.

Others feel that insuring mortgages and subprime bonds will help fix the problems. Simply put, any financial instrument that is US government backed will create a large market the world over. In turn, this will create immediate liquidity.

At this point, the government is trying their best to fix the credit crisis through a number of improvements including a large economic stimulus package. Some experts feel that this will help get things moving in the right direction, whereas others are not so sure. But one thing is for sure: the government has the ability to make the necessary changes in order to better the current situation.

The credit crisis has affected millions. While current government policies are starting to kick in, it is difficult to say how long it will take for things to start to kick in and change for the better. Only time will tell if the government makes more changes in order to address the credit crisis.

Fiscal policy is the ability of the government to collect taxes and to regulate government spending. Monetary policy has to do with the Federal Reserve Board’s ability to regulate the money supply and interest rates.

With these tools here are four things the government can do to improve the economy:

1. Setting a low interest rate at which qualified borrowers can obtain a loan or mortgage. This will help to improve the real estate market, as well as the amount of money that lenders are giving out.
2. Government spending is out of control causing the national debt to continue to soar. Although the new powers-to-be are talking about cutting the national debt they need to back up their words with action in the months to come. The question is: how much more can the government borrow until credit markets become alarmed?
3. Create jobs. This is one area that President Obama is adamant about addressing as soon as possible. He has big plans for creating millions of green jobs in the next couple of years. Any plan that creates jobs and lowers the unemployment rate is one that will definitely help the economy to thrive once again. New jobs also help to boost the amount of taxes the government is collecting.
4. Cut capital gains tax in order to bring back investors who have tightened up. The ability to earn tax free profits will not only bring back investors, but it will show others the benefits of getting involved.

It is important for government policy makers to weigh the pros and cons of each and every option, and then decide which ones are best for the economy and the country as a whole.

It goes without saying that everybody, qualified or not, has an opinion on how the government can fix the economy. The above are four common ideas shared by millions of Americans. It will be interesting to see if the government agrees, and eventually decides to implement one or all of these plans.