Why Deficits Matter: 5 Examples
For many reasons, our public officials, and politicians, focus on responsibly budgeting, not, based on doing what’s necessarily, best for the United States, but, often, more on politics, and some political decision, agenda, and/ or self – interest. However, the reality is, whether one considers himself, to be, a progressive/ liberal, moderate, or conservative, the size of (or, even having one) the federal deficit, truly does matter, and count! We have often, observed, in the past few years, many members of today’s majority political party, profoundly oppose deficits, when they were in, the minority, but, based on their nearly, universal support of the recent tax legislation, seem to overlook, the impact, their vote will have, on significantly increasing these deficits. Beware, when any politician, claims granting most of the tax cuts to the wealthiest, and corporations, will result in a thriving economy, using the so – called, logic of trickle – down, economics, because, historically, that has never been the outcome. In fact, the first few months have seen, the deficit increase, far more than, in the past. This article will examine 5 examples of why, deficits matter.
1. Value of dollar: When the United States, has increasing debt, it normally, ends up, reducing the value of the dollar. This, often, has the impact, of raising costs of many consumer items, including imported ones, and, things, such as the price of oil and gas, which base the price of raw crude, in American dollars. When the world loses confidence in the strength of the U.S. economy, many Americans lose much of their spending power, etc.
2. Debt: When the nation carries more debt, the annual budget, witnesses a larger proportion of, its expenses, go towards, carrying – down, the debt, and paying back, the ever – increasing interest payments, which ensue! Regardless of what anyone proclaims, debt matters, and has a significant impact!
3. The impacts on future interest rates: When the country carries more debt, the longer – term impact, is generally, raising the interest rates. Some will tell you, this doesn’t really matter much, because, it will also end up, with receiving higher interest rates, too, but, the reality is, rates paid never keep up, with those charged! This affects consumers, in terms of mortgages, loans, etc, and, often changes buying habits, and, thus, may often hurt business, also!
4. Weak economic structure: Before he was President, Donald Trump, often, proudly, referred to himself, as the King of Debt. In articulating his support for the tax cuts, he seemed to not, be that concerned, with the debt, and/ or deficit, but, in recent speeches, has had the audacity, to proclaim, he will eliminate the deficit by the end, of his second term. Large deficits impose weaker economic structures, and scenarios!
5. Costs of other commodities rise: Many items, sold worldwide, are priced, in U.S. Dollars, and, when the dollar becomes weaker, in relation to foreign currency, the pricing in dollars, often increases. These commodities include items such as oil, and many other minerals, ores, etc.
Fool me once, shame on you. Do it again, shame on me. Don’t let anyone tell you, in the longer – term, deficits don’t matter, because they count, a lot!