Essay on Deficits and the Economy

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Deficits and the Economy

The fact that the federal deficit for 2013 is already in the hundreds of billions of dollars and we’re barely in the month of February is certainly cause for alarm. It is projected that by the end of fiscal year, our government will have accumulated yet another trillion dollar deficit. The question looms; is all of the money being spent to create new jobs working? Is all deficit spending help job growth equally? How will all of this paying out affect our economy in the long run? Although I believe that the deficit spending is beneficial to our economy and its infrastructure, I don’t believe the money is being invested in the right areas and that all spending is not created equally. Furthermore, the deficits created will only hurt our economy in the long run as our debt spins climbs higher in the coming years. To get a better feel as to what the future deficit for 2013 may hold we must look to the previous year. According to records, the US had a deficit of $1.3 trillion. The largest portion of that money went to defense with a whopping $701 billion while transportation only received $27 billion and the Small Business administration received a meager $1.2 billion in comparison. According to a study done by economists at the University of Massachusetts, for every billion dollars spent on the defense budget, 8,555 jobs are created. This is around one third of the amount which can be created by investing in transportation or construction jobs alone. According to The Economist, the US spent more in 2010 on defense than the other top 14 world powers combined. All of this spending is doing very little to create jobs; money which could be invested in such needed programs as unemployment and education. Along with what I believe to be misappropriated spending, were tax cuts which did very little to stimulate the economy and were viewed by many to simply be a political move by the outgoing administration. The typical person received a lump sum of $600 in the first quarter of 2008. According to studies, this tax cut only created $1.19 of GDP in the first quarter for every dollar spent. I believe that this money only created further debt for our country while doing nothing in the long run to stimulate the economy. With the accumulating deficits, came an enormous debt. The current debt in the US is $16 trillion and climbing. What would happen if we don’t get this debt under control? If the government is unable to pay off its debt, it may be forced to take extreme measure such
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