The existence of long run budget problems has been for decades. However, since the 2008 period of the great recession it has significantly worsened causing revenues to plummet. Fiscal policies were enacted to stabilize the situation as cut tax revenues and adding to spending, at this period the national debt infatuated from 40% to 62% in 2010. During this year, a greater budget deficit was experienced as the government expenditure was more than its revenues.
Unless the United States fiscal policies adjust drastically on the budget deficit, the national debt will propagate at an accumulative rate and far outpace economic growth. According to Alice Rivlin, increasing tax among the public is necessary. The chief reason that the debt was expanded is the subsequent supply side and Ragonomics as pointed out. The theory suggests that lower taxes would free up businesses to create more than enough growth to replace the lost revenue, nevertheless, if tax increases it will cause a significant drop in spending hence a lower budget deficit.
Secondly, the government should cut its spending’s. As the films suggest don’t buy stuff that you cannot afford, the Congress should create a budget that is within its limits. For instance, in 2008 the government spent more than their revenues similar to 1933 hence borrowing. Thus, by cutting spending will reduce the budget deficit in the long run.
Lastly, the Congress should promote their economic growth. The higher economic growth reflects to high tax revenues that will in turn ensure governments spending on development. According to Warren Buffet, if 2-3% GDP is paid to the foreign holders of U.S government then after few years the government will not be undergoing a financial deficit.
In conclusion, the budget deficit is the major problem in the U.S economic. Thus the Congress should essentially function on the fiscal policies. A combination of these policies ensures a boom on the current budget deficit creating financial stability after a long time. Nevertheless, the Congress should be timely on the policies as fiscal policies tend to worsen the economic situation.