How and why the U.S.’s deficit, surplus and debt have an effect on unemployed individuals?
Large debt and deficits cause uncertainty in the markets, which lead to lay-offs, increasing unemployment. The story of American deficit started in January 2001. It was the time when President Bill Clinton was leaving office. Since that time annual budget continued to grow slowly reaching the point of a $1.2 trillion annual deficit in those years. (Leonhadt D., 2009)
Major budget swing came from the following categories: the business cycle, President George W. Bush’s policies, policies from the Bush years. New policies suggested by Obama could hardly change the situation - US budget deficit continued to grow. In addition to budget deficit, US had to live through recession of 2001. All these factors had a strong impact on the following areas: (a) Future Social Security, (b) Medicare users, (c) The United State's financial reputation on an international level GDP.
The impact on social security Theoretically it is possible that Social Security surpluses could have led politicians “to accept larger deficits in the rest of the budget than they would have done without the surpluses.” (White J., 2012, p.6) Therefore, the policies that created Social Security surpluses were rather helpful in improving the paying ability of this organization in the future. However, the problem was that in many cases the surplus had been wasted because US policy-makers were not enough fiscally responsible. As for the rest of the budget, Social Security had no real support from the side of the state. In the final outcome White gives the following advice: “It would be better if the desire to improve economic performance of the state will not include cutting Social Security payroll taxes.” (White J., 2012, p.12) However, if this tendency do exists it will lead to cuts to the payroll tax. In the final outcome cuts to the payroll tax will have a negative effect on the social security of US. Medicare users Outside economists agree that the Medicare budget also faces some big problems. Generally, the situation looks as follows. US guarantee health care for its citizens. Consequently, any attempts to cut budget will lead to a decrease in overall quality of service. The only way to bring extra money from Medicare is to take money from doctors, drug makers and insurers, and it is very complicated task. All other measures like cutting down debts are useless. So far US politicians are focused on the ides of preventive care. Many researchers regard this idea as inefficient as it would do little to cut costs. (Leonhardt D., p.45)
Second, even serious health care reform will not bring serious changes to budget. Of course, the changes are possible but the question is the time of these changes. Research results indicate that health care spending would decrease only starting from at least 5 years. Real changes would be felt in the nearest 10 years. Till that time the US will be in serious dilemma.
David Leonhardt, the author of The …