Over the last few years there has been quite a bit of talk about the government's nation debt. In recent years this number has gone up substantially. Many are wondering what is causing this debt to go up so high. For the most part there are many causes to this issue. Many of these are the same reasons why your personal debt might go up.
The first issue with the debt problem is the deficit. A deficit is when more money is spent than is taken in. This is like your budget where you might have more bills that month than the money you make. Some of that money becomes debt to cover the bills that are there. For a number of years the government has run a deficit each year. After awhile, this adds to the overall debt.
Another reason that the debt goes up is that there is interest on the debt. This means that unless the interest is paid off each year, the debt will continue to grow larger. As this number becomes bigger, the debt will grow faster and faster. At times with government, just like your personal accounts, there are unplanned expenses. Sometimes these go into the billions of dollars. Every dollar that is spent in addition to what was planned for becomes debt.
There are many social obligations that are now costing much more than originally planned. This means that people are part of a program that are receiving benefits at a much higher cost right now than was intended. This extra money spent becomes debt.
Another huge factor for the debt is lower revenue or income than expected. The government might spend extra money at one part of the year, but not make as much back as intended. The difference between these two numbers becomes debt. As this happens more and more, the debt gets bigger.
Running a government this big is never easy and having a national debt is often the result. By looking at the various factors that can impact this debt, it is easier to understand how we got there in the first place.
0 comments:
Post a Comment