bfin gdb1 - The article Red Ink Rising: A Call to Action to...

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The article Red Ink Rising: A Call to Action to Stem the Mounting Federal Debt not only presents a “wake up” call to society, it also warns of the potential catastrophic consequences that will affect the world and the economy in the future. The article addresses the serious debt crisis that the United States has accrued due to revenue plummeting and government spending increasing. The Peterson-Pew Commission on Budget Reform is asking Congress and the White House to take action against this rising problem. Their proposal, in short, consists of a commitment to stabilize the debt and to lower the government spending to reduce our reliance upon foreign economies. Foremost, the article projects that the debt is going to steadily grow and reach 85 percent of GDP by 2018, 100 percent by 2022, and 200 percent in 2038. The Peterson-Pew Commission proposes an in-depth six step plan that should gradually sustain the economy. As a result of this plan, the debt should be stabilized by 2018. According to the article, “The Looming Fiscal Crisis”, if the debt continues to grow then it will impose severe problems for the Americans’ way of living by fueling inflation, interest rates will rise, dampening wages, slowing economic growth and job creation, and shrinking the government’s ability to cut taxes, invest, or provide a safety net (pg. 7). In addition, the ever growing debt will cause foreign investors not to trust the U.S. economy and the dollar may no longer be the foundation of global economic transactions. Already, the IMF and the United Nations have begun to look for a worldwide currency for an alternative to the U.S. dollar. As an outcome, future generations will have to pay the price of today’s borrowing. Extreme debts can affect the country, its citizens, its economy, and could potentially jeopardize the U.S. economic leadership. Factors:
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This note was uploaded on 02/24/2011 for the course FIN 3403 taught by Professor Tapley during the Spring '06 term at University of Florida.

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bfin gdb1 - The article Red Ink Rising: A Call to Action to...

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