Debt, Surplus and Deficit in Economics

Debt, Surplus and Deficit

As children the nightly news seems the most boring show in the world, bring complaints and requests for cartoons from all that know daddy will not change the channel. It is easy to ignore financial news when the country is doing well. However in our current fiscal situation the markets take a more prominent role as the economy continues to stagnate. This is because now our debt, surplus and deficit now play a more direct role in the ordinary citizen’s daily life.

(Amadeo, 2012)"Initially, deficit spending and the resultant debt can increase economic growth. This is especially true in a recession. That's because deficit spending pumps liquidity into the economy. Whether the money goes to jet fighters, bridges or education, it ramps up production and creates jobs. However, not every dollar creates the same number of jobs. In fact, military spending creates 8,555 jobs for every billion dollars spent. This is less than half the jobs created by that same billion spent on construction." Deficit spending has an immediate short term economic boost. However this makes the currency worth less. While yes the high paying jobs begin to return a surplus of currency begin to drive up prices across the board. This also has the effect of making domestic goods more competitive in foreign markets. While now it may be easier to repay that auto loan, the price of bread has gone up fifty cents.

While the deficit grows and surplus seems from a bygone age our aging Americans need to concern themselves with the future of Medicaid and Medicare. Many of these programs are running vastly under budget and the current deficit and debt seriously puts the solvency of these programs at risk. (Holahan, 2012)"The U.S. has been engaged in an ongoing debate over the size of the federal deficit, a debate that is likely to continue through the 2012 presidential election and beyond. Medicare and Medicaid spending are a major part of this debate. Some have called for a...