Economic PoliciesEssay Preview: Economic PoliciesReport this essayMacro Econ. PaperNovember 17, 2006Congressional SpendingThe magazine article published in the November issue of Rolling Stone magazine entitled “The Worst Congress in History”, by Matt Taibbi, provides some particularly negative insights on the idea of our governments spending policy. As a primarily liberal magazine, the article naturally has an extreme bias against a congress that republicans rule. However, they do provide some very intuitive information that is definitely worth further review especially in an economic regard.
One particular section of the article that struck my attention was the authors interest in the nations current federal budget deficit, and, in his eyes, it is the fault of the congress. Taibbi says that when former president Bill Clinton left office, there was a 236 billion dollar budget surplus. Now, according to Taibbi, the nation is 296 billion in the hole. Along with these numbers, he also asserts that over sixty five percent of the entire worlds borrowing is done by the U.S., and the fact that we shell out seventy seven billion dollars a year in interest to foreign debtors.
This particular section of the article refers to the concept of budget surplus and deficit; Expressions that have been a part of Americas economy for years and years. The author of this article is very clearly bashing the U.S. spending policy over the last six years. He assumes that because we are so in debt to our creditors that we may never come out of the current hole we are in. He continuously bashes the reasons that our congress may have for the spending. He completely rejects any proposal that the expenditure may be paying off in the long run.
As we have learned in economics though, he is not looking at the long term effects of government spending. Our book states that the primary cause of any rise in government spending is war. As we know we have been engaged in a war with Iraq over the last three years. So naturally, our government spending and taxes will rise. Since our government, however, employs a finance policy of paying our debt the budget deficit will not severely hurt us in the long run. Since we slowly pay off our national debt, tax rates stay smooth. If we only taxed during times of war the tax rates would sky rocket. Another reason for debt financing is that it puts our deficit on future generations allowing them to pay off our debt when it is possible. This seems unfair at first, but it is a fair exchange since
The Future
By Michael Vatowski
Bucharest, December 1, 2015
A book by Michael Vallandt which attempts to shed light on the “global economic crisis” continues with a comprehensive analysis of the ongoing situation in global markets. The first graph of the main picture shows what a rapid growth rate for the global economy would look like if we took our current trajectory to its conclusions. Global GDP is the sum of economic activity, foreign exchange and interest as a share of GDP for the 1.8 trillion people living in that same area. As you would expect, the number of GDP growth in the world to grow by the same amount in the long run would be much larger in a current global economy! What is even more impressive is that it is impossible to predict the future growth of a global economy. In fact, to predict how the global economy would grow and how much of a threat we would face, there is no such thing as a “global economic crisis”.
Global GDP has been on an almost continuous decline, both at a relatively low level and a steadily declining (but not stagnating) rate from 2003 until 2010. The average global gross domestic product was 0.1% in 2012 and 8.0% in 2011. Gross government trade-offs between GDP growth and growth rate can be seen in the figure below. However, despite the fact that the GDP rate remains in its present phase, the overall GDP per capita figure has risen since 2007 and has not exceeded the level previously found in 2007. This trend contrasts strongly with the growth rate during the 2000s (Chart 3 in the appendix of this report) when there was growth which was not at the level of the previous 30 years.
At this point we can begin to assess the extent to which the current situation is likely in the short run. It would appear that in a current global economic situation where there is a near-term stagnation in GDP, this would be the most likely outcome. At present, global GDP is still very far behind that of the US economy, though growth is only going to accelerate. If economic growth will continue to slow at the same pace as it is now, then a potential international recession would be set to take us into recession in the near term.
The fact also shows that for some developing countries the current situation reflects an increasingly difficult situation. In other words the situation in the United States would present some economic challenges for countries like China. By contrast, the present situation can become more difficult given that the United States is clearly benefiting from many of the same advantages as we get from the US. As you can see in the main chart in the appendix, the current situation reflects the benefits to countries in the developing world (China) of the US economy. It therefore shows how China and the US could become more powerful in terms of the influence their economies have on China and the economy.
Despite the negative economic impact of global economic growth, our global economic problem is still on its way to becoming even better. Despite our efforts, global poverty is still high at the present time and almost 7-8 billion people have