Americas “Buy now, pay later” attitude has caused the
United States to fumble a great “total amount borrowed from investors to
finance the government’s deficit spending.” (Clayton, G. E. 2016) also known as National debt. The
debt is a continuous accumulation of federal Budget Deficit a “negative
balance after expenditures are subtracted from revenues”. (Clayton, G. E. 2016)
that is about six hundred seventy-two billion dollars a year. As well as Budget
surplus that are “a positive balance after expenditures are subtracted from
revenues.” (Clayton, G. E. 2016). New
programs such as social security, Medicare, and tax cuts add onto the national
debt. The United States government spends more than what is being brought in,
this deficit gets added onto the national debt each year. Causing the United States to stay in “a negative balance
that results when expenditures exceed revenue, with the amount of money the
government spends and the way these costs are divided up” (Clayton, 2016). Also
known as a Budget deficit.
A way to reduce
the national debt is to cut the funding that the government spends on Social
Security. Social security is a proportional
tax, which implies that it is “the same
percentage rate of taxation on everyone, regardless of his or her income”
(Clayton, 2016). “Social Security has been one of the largest federal
spending programs since 1993; the United States spends over eight hundred
forty-five billion dollars each year to fund social security.” (Boccia, 2014).
“The current tax rate for social security as a whole is 12.6%, the employer is
required to pay 6.2% in taxes and the employee pays the remaining 6.2%” (Investopedia, 2017). This percentage of money is taken
from citizens and is paid to the government to cover monthly payments for the
retired and disabled Americans. The need for social security will only continue
to rise as many Americans retire or become disabled, as a result, the
government will raise taxes. “Spending on social security will surge by 77%
from $845 billion dollars to $1.4 trillion by 2024” (Boccia, 2014) Reducing the amount of money spent on social
security will contribute to lowering the national debt.
Cutting Social Security Funding
Cutting tax rates
for Social Security will reduce the national debt by at least $1.6 billion ,
this is an effective way to reduce the $672 billion deficit since social
security adds that onto the deficit each year. While this helps reduce debt,
unfortunately, cutting social security funds will have a great effect on the
18% of people who rely on Social security every month. For example, “poverty
would surge among the elderly and disabled” (Palmer, 2011)
Medicare tax is a progressive tax, which is a “tax
that imposes a higher percentage rate of taxation on higher incomes than lower
ones” (Clayton, 2016). Medicare is “one of the largest and fastest-growing
programs in the entire federal budget” (Amadeo, 2017) It is also the “largest
health care program and it’s spending will surge 72 percent, from $603 billion
in 2014 to $1.04 trillion in 2024” (Amadeo,
2017) “The Medicare payroll tax is 2.9%.
It applies only to earned income, which is wages you are paid by an employer,
plus tips. You’re responsible for 1.45% of the tax, and it’s deducted
automatically from your paycheck. Your employer pays the other 1.45%” (Fidelity,
2017). Therefore, “high-wage earners will owe an additional 0.9% on earned
income” (Fidelity, 2017).
Medicare is one of the biggest health care
programs that over 40 million Americans rely on; therefore, the program should
not be cut completely. Instead, the amount the government spends on Medicare
should be cut in half. This will allow citizens to still receive the same benefits;
there will just be less money. Cutting the Medicare budget in half will reduce
a large portion of the national debt.
United States is a place filled with many opportunities and although being in
great debt is very troublesome to the country, these solutions and many others
can be an effective way to slowly reduce the debt and maintain a balanced budget known as “an annual budget in which
expenditures equal revenues, can ultimately help with the current
struggles of the high debt” (Clayton, 2016). Starting with lowering the
funds of Social Security and Medicare is a great way to begin seeing great
Kessler, G. (2011, July 12). Social Security and its role
in the nation’s debt. Retrieved December 15, 2017,
Amadeo, K. (n.d.). 3 Reasons Why America Is in So Much
Debt. Retrieved December 15, 2017,
What’s driving American firms overseas. (2015, August 16).
Retrieved December 15, 2017,
Medicare taxes and you. (2017, October 04). Retrieved
December 12, 2017, from
(n.d.). Federal Spending by the Numbers, 2014: Government Spending Trends in
Graphics, Tables, and Key Points (Including 51 Examples of Government Waste).
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E. (2016). Economics. Columbus, OH: McGraw-Hill Education.