8 Jun 2022


Stabilizing the Debt

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Many financial experts contend that among the worst worries in many nations, including the United States (U.S), is the slowdown in profitability development. This is because the amount of yield per hour is a key determinant of expectations for everyday comforts. Most citizens in the U.S. have different views on how the nation is handling various financial measures (White, 1974). The U.S. is experiencing rising debts which are long-term in nature, and the matter of stabilizing the debt in the nation’s budget is very crucial. While carrying out the simulation to preserve the U.S. Debt, some items were cut due to reasons that benefited minimizing the long-term debt (Inman, 1996). There were no areas chosen to reduce revenue by spending more of instituting tax cuts. 

The items that were cut to stabilize the debt and the reasons include; 

Troops in Afghanistan -a reduction to a target of 30,000 troop levels ensured a cut in the U.S troops. The remaining soldiers in the country would be capable of controlling terrorist activities in this country since the cases have reduced by a good number. Therefore, reduction in this figure would not have adverse effects in the supervision of peace in Afghanistan. The result of this reduction by the year 2017 would be a reduction of $680 USD in billions in U.S. long-term debts. 

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Discretionary Spending- a decline in this expenditure would lead to an improvement in the economy of U.S. Over a period, the most prominent U.S. agencies that deal with credit rating have insisted that there is a need to add some reduction over the long span. These organizations point out that significant development of the U.S. economy relies on this reduction. By cutting this spending, there would be a reduction of $3200 USD in billions in the overall debt. 

Veteran Benefits- reduction in security income benefits for veterans would help to stabilize the debt. Veterans would be offered more assurance at their working stations. Providing them other minimal benefits to compensate this reduction would settle any worries. There would be a net decrease of $50 USD in billions, and this would play a good part in stabilizing the debt. 

U.S. Navy fleets- continued progress in the security of the Marines would give room for a reduction in the U.S Navy fleets to 230 ships. A reduction of $110 USD in billions would stabilize the debt. 

Military troops- civilians were used to replace part of the army forces, and this contributed a reduction of $300 USD in billions. Civilians would receive proper training to fit in the military forces positions, and this prompted the decline in the number of military troops. 

After the simulation, 63% of GDP was obtained. A cut of $16, 475 USD in billion was necessary so as to get 60% of the GPD in the U.S by the year 2024. By reducing the items mentioned above, this would be achieved, and the long-term debts in the U.S. would be reduced considerably (Inman, 1996). The figure obtained is reasonable as a real world budget since it’s possible to reach to such figures in the reality. The numbers obtained are realistic because, in the year 2016, the U.S needed to cut an approximate 17, 947 USD in billions to stabilize the debt. 

In case these budget changes were advocated by the president, there would be some American citizens supporting him whereas, others would oppose him. However, most American civilians would support the president (Inman, 1996). Likewise, credit rating agencies would also strongly support the president as they would feel that these budgetary changes would contribute a great deal towards improving the country’s economy. Civilians would benefit from these changes as some of them would get employed and this would improve their living standards. The military department, on the other hand, would find these changes difficult to handle. Reduction in veteran benefits is a change that affects the veterans, and this may create a dispute between them and the president. The security forces, as well as the navy, would feel that the removal of their troops and ships would leave them in an awkward position to uphold security. 

The issue of whether the U.S. should pass a law or constitutional amendment requiring a balanced budget every year prompts a lot of debate since there are those who support the idea and those who don’t. Different views on whether the Constitution needs to achieve an adjusted spending plan reflect contradicting opinions about whether such a revision would be a proper answer for the issue of relentless government deficiencies and developing federal debt. Those supporting a balanced budget amendment argue that this bill will protect the generations to come from obligations that should be taken care of by the current generation. These individuals point out that it’s only an established constraint that will be sufficiently substantial enough to control officials' propensity to act in monetarily untrustworthy ways. 

Those opposing this constitutional amendment hold that it could constrain the capacity of policymakers to utilize commercial strategy to neutralize retreats or react to national crises. They also keep their facts that the lack of proper and strong political will is the leading cause of fiscal imbalances and not an insufficient process. During the year 2016, the U.S. government announced that the budget deficit rose during the first half period of the budget’s year. It was a clear indication that spending was growing faster compared to revenue (White, 1974). It was an indication of change following a span of six years of improvement that the U.S. had encountered in the financial picture. 

The whole project has helped me to develop new perspectives on the budget process as well as a deficit. Concerning the deficit, it’s now more clear that a lot of effort needs to be done in the U.S since it is rising and this will have adverse effects on the U.S. economy. Controlled spending makes it go below the revenue, and this can have an effect of minimizing the deficit. From the project, it’s clear that the present government’s spending procedure is neglecting to meet its most fundamental commitments. The process should not only provide a precise guide to deciding the country's yearly expenditure and income needs but also smother debate and counteract collaboration. The new budget process would be the appropriate solution. 


White, W. (1974). Debt management and the form of business financing. The Journal of Finance , 29(2), p. 565-577. 

Inman, R. (1996). Do balanced budget rules work? US experience and possible lessons for the EMU (No. w5838). National Bureau of Economic Research. 

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