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National Debt

Introduction

As at present, the national debt held by the public is approximately sixteen trillion dollars,

equating to roughly seventy nine percent of our state’s economy, as it has been indicated by Gross

Domestic Product (GDP), the gross debt, which accounts foe funds owned to other parts of the

federal government, is roughly twenty-two trillion dollars, equating to almost one hundred and

five percent of Gross Domestic product (GDP) (O'connor, pg.16). Now, it shows that we are not

far away from the condition which is currently affecting the economy of Canada. If the federal

government does not take appropriate measures, then our state may end up falling into troubles in

new future. Stable economy is very key to any state. To attain stable economy, it requires that the

national debt is kept at its minimum value possible. Therefore, in this writing, we seek to discuss

why federal government must embark on prioritizing the national debt in every federal budget

done.

Reasons for Prioritizing Reduction of State Debt

For us to achieve a meaningful national debt reduction, the government must have a

detailed strategy which addresses key drivers of the National debt. Restructuring the code of

taxation, slowing entitlement spending growth as well as minimizing other public spending and

helping in growth of the economy (O'connor, pg.32). Embracing such kind of strategies, the federal

government is assured of putting the national debts on a downward path over the long term. Let us
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see why federal government must prioritize on reducing national debt in almost every federal

budget to be passed.

a) The national debt is a bipartisan priority for Americans – Approximately three quarters,

approximately seventy one percent, of United States citizens supports that the national debt

must be among the top three priorities for the state. The same idea is raised concerning the

Canadian economic state, the citizens, voters must show great concern about the

government deficit spending (ALEXANDER, 2018, para, 3).The citizens need to push for

prioritization of the reduction of national debts to avoid possibility of future economic

recession. The challenge with Canadian government is that it gave politicians the social

permission to pursue spending deficits which is very wrong.

b) Reduction of national debt would help in the return of trillion-dollar deficit – The office of

the congressional budget has projected that the deficit in budgeting will increase from

seven hundred and ninety-three million dollars in this year to approximately two trillion

dollars. This would accumulate to roughly thirteen trillion dollars over the period of ten

years (Stiglitz et al. pg. 25). Now, what does this tell the federal government? if we do not

pay attention on inventing good approaches to reducing national debts, our economy may

deteriorate in near future. In fact, this among the key factors why the federal government

must prioritize on reducing national debt; basically, to reduce future foreseen economic

deficit.

c) The costs of interest are growing at an alarming rate – The federal reserves have already

indicted that the costs of interests are expected to increase from three hundred and fifteen

billion dollars to nine hundred and fourteen billion dollars by 2028 (Stiglitz et al. pg.28).

For the next ten years, the costs of interest will total almost seven trillion dollars. Again,
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the federal reserves have indicated that by 2026, interest will turn number three among the

largest groups of the budget. This is severe threat to our nation, with many vital priorities,

none of Americans wish that interest turns out to be number three among the largest

government programs. One may wonder what is funny with increased cost of interests! For

instance, looking at financial post about Canadian economy, the state has 3.2 % economic

growth but it does not help the country to stabilize its economy!(ALEXANDER, 2018,

para, 5) Why? Due to high national debts, the growth coincides with some levels of

government taking on substantial debts and nothing is changing the state of the economy.

Therefore, for any state to avoid such kind of challenges, it must focus on reducing national

debts in almost budget to be passed.

d) Increase in national debts implies lowering incomes – According to reports from the office

of congressional budget, growing national debts would reduce the earning of a four-person

family, by approximately sixteen thousand dollars in the next thirty years. If you can

remember, the issue of wage rate is currently on debate, the federal government want to

reduce wage rate. Stagnating wages as well as growing differences in earnings and wealth

are very concerning trends. And therefore, government should consider reducing national

debts in every budget to avoid harming normal citizens.

e) A solid fiscal foundation leads to economic growth – If I may say, this is actually what is

eating the Canadian government right now. The government lacked a solid fiscal outlook.

As a result, Canada recorded a national debt which is continually increasing from high

levels. The states’ household credit for the fourth quarter back 2016, was ahead of all key

economies, including United states (Inc., Postmedia., 2018, para 2) . Therefore, this is a

clear illustration why federal governments should prioritize reducing the national debts in
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every budget done. Otherwise if we don’t do it now and in a smart manner, we many find

ourselves swimming in the same ocean of economic recession with Canadian state in few

years to come.

Conclusion

In a nutshell, for our state to be economically stable, the federal government must ensure

in every budget it passes, focuses on reducing the states debts. We have already highlighted some

key measures which can be used to reducing national debt. Otherwise continued increase in

national debt threatens stability of our economy and the economic recession of 2009 my repeat

itself. However, it is a matter which can be solved as early as now if at all federal government

focuses on reducing national debts in every federal budget they do.

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Work cited

ALEXANDER, CRAIG. "Canadian Voters Should Be Concerned About Government Deficit

Spending". The Globe and Mail, 2018,

https://www.theglobeandmail.com/business/commentary/article-canadian-voters-should-

be-concerned-about-government-deficit-spending/ .Accessed 18 Nov 2018.

Inc., Postmedia. "Canada’s Economic Growth Has Come at A Price — Its Debt Level Is Now

Highest in The Developed World". Financial Post, 2018,

https://business.financialpost.com/business/canadas-economic-growth-has-come-at-a-

price-its-debt-level-is-now-highest-in-the-developed-world .Accessed 18 Nov 2018.

O'connor, James. The fiscal crisis of the state. Routledge, 2017.

Stiglitz, Joseph E. et Jay K. Rosengard. Économie du secteur public: quatrième édition pour les

étudiants internationaux. WW Norton & Company, 2015.