US rising debt level and current economic problems Essay

US rising debt aim and current economic problems - Essay ExampleAccording to the estimate of the organisation for economic cooperation and development (2011), the budget deficit for US is likely to increase to 10% of the GDP. This projection means that the US disposal must pronounce ways of arresting the looming economic crises as a settlement of the increasing deficits. The main reason why the public debt in America would increase is the direct for the government to increase job opportunities by stimulating demand (Saad 2011). When a government intends to create more jobs, it will increase the train of demand by increasing its public expenditure and reducing the level of taxation. This had do the Obamas government increase the level of public debt. At the same time, the 2008 economic ecological niche could also be a reason for the increased budget deficit. After a recession, the economy of a country needs to be stimulated to increase the level of demand and to create more economic activities. This made the US government increased their level of budget deficit to increase the rate of convalescence of the domestic economy (Amadeo 2011). The increased expenditure from external borrowing accompanied by a decline in the level of taxation must will in an increase in the level of public debt. If not closely monitored, the increased public expenditure will result in increasing level of inflation making prices of goods rise in the market. The increased cost in recapitalization and acquisition of financial institutions as well made the public deficit soar (Turner 2008). One of the causes of the economic recession was failure by the financial institutions to act decisively to rescue the depreciation in the economy. The failure by the credit rank agencies to give true credit risks made banks increase their mortgage loans that in the long run led to the recession. The US government as a result of this ventured into takeover of some banks which therefore meant increase in government spending making the economy experience a rising level of deficit (Saad 2011). The increases government spending accompanied by the declining tax rates was bound to increase the level of debt and this makes the projections of OCED realistic and important for government formulation. It must also be notable that the increasing deficit has made the democrats and republicans take away clashes on the measures that the government should undertake to help lessen the level of deficit and the general debt level (Saad 2011). The two parties have agreed collectively on the short term measures of a cut in the government spending but have failed to agree on which areas that the governments should reduce spending. They also have different thoughts on the long term remedial. To correct the economic problems in the economy, the government can pursue a significant reducing in the deficit level. The US government through such a move would be in a position to reduce their inc reasing debt level and at the same time solve other economic challenges. A reduction in the level of budget deficit can be made for various purposes the first reason for a reduced budget deficit would be to help reduce the level of government debt (International Monetary Fund 2010). For instance, the Obama validation projects that through the reduction in the government deficit for a decade would make the government solve the high level of debt (OECD 2011). Another reason for piercing the level of government deficit would be