Final Paper

Sheldon Parris
English 102
Professor Sonia Begert
12/4/15
 National Debt
          

         The United States for many years now have been struggling with a very large deficit that has only been increasing in time. We as a nation fall under the category of one of the most in debt countries in the world, and currently are ranked 6^th, however this is based upon population. If you were to simply look at dollars owed by a country, sadly the U.S is ranked 1^st. In this paper I am going to address China one of the U.S. main creditors, and why things have gotten so out of hand. Not only do we owe money to China but we borrow money from them to in turn purchase Chinese exports. With all of the research that I have gathered, I’m going to explain why it is this way, and how our nation can attempt to turn things around. America the “greatest country in the world” may have some hidden debt that I want to bring awareness to so we can take action now.

      As of today our country is just shy of 19 trillion dollars owed to national debt according to usdebtclock.org, which is a running calculator viewable, by anyone of multiple categories of debt, however it shows debt paid off as well. Unfortunately those paid off calculators run a lot slower, simply making it impossible to seem as if we will ever get anywhere with paying off our debt. I encourage anyone who reads this to check out the debt calculator to get a better idea of the insane acceleration rate. Too put these numbers into perspective a little more, an article written in 2012 had this to say, “The national debt of the U.S. government has doubled to $15.2 trillion in the past four years. The statutory national debt ceiling has proven ineffective in restraining runaway deficit spending, so that a constitutional amendment that requires a supermajority of both houses of Congress to raise the debt ceiling is long overdue” (Mcculloch 219).  Thus meaning in merely four years from 2008-2012 went up by over 7.5 trillion. He talks about a national debt ceiling, which isn’t a very common term, but it simply means how much money can be issued by the US treasury, limiting how much our federal government can spend, in other words our debt limit, can issue. These “ceilings” are set up only to be broken time and time again, for good reason? Who knows? That’s the whole problem with them is that however a budget is a great idea for a single parent or a college student which are hard enough in themselves to follow and abide by, you can imagine the extent of our federal government. Don’t take that the wrong way though, a budget is a must for a country, however a budget must be followed and only followed to work cohesively and efficiently. Thus being said with all of the problems in today’s society for example 9/11 or ISIS it is very hard to limit spending when it comes to our country’s safety.
     Moving forward, “Beijing is the largest foreign holder of US government debt - passing Japan in 2008 to become, in effect, the US government's largest foreign creditor. While some claim this gives Beijing unprecedented power over the United States…”(Sharma 1). As of 2008 over 13% of our national debt is owed to the country of China, which is approximately 2 trillion dollars. The part that is the most absurd is that China continues to export products to us that we continue to pay for with borrowed money. It makes you wonder why China continues to export products to us. Is it possibly because they want to have so much of our debt they could eventually overpower us? They already are financially what is next. America needs to keep this into considerations when continuing to make deals with other sovereign nations. “Since the early 1980s, the U.S. net international investment position has swung from a creditor position of more than 5 percent of GDP to a debtor position amounting to 22 percent of GDP. This situation has raised concerns about the extent to which the U.S. can continue to accumulate foreign liabilities” (Glick 82).  GDP also known as gross domestic profit is simply the health or well being of a country. As you can see our GDP has changed drastically for the worth and a large factor in that is with China. In retrospect the US and China bounce between number 1 and 2 world ranks of highest GDP, which is a very good thing. A high GDP means that a country has either a rise in value and or a higher-level median income, which is surprising considering that china has so many underpaid citizens, however they have over a billion people in the country.
     “Chinas Substantial Holdings of U.S. government debt and the creation of a sover- eign wealth fund (SWF) are causing concern that U.S. economic and national security may be at risk. Rapid economic growth, record current account surpluses, and a high domestic saving rate have allowed China to accumulate more than $1.5 trillion in foreign exchange reserves, much of which is invested in U.S. government securities”(Dorn 151).  This further expresses my concern for our nation and validates the fact that with too much money owed to china they could be a serious threat to this country. There are many ideas to try and stop the debt from growing and so far none have worked. I honestly can say that it may be something that only time will cure. This does not mean we shouldn’t continue to make smart economical decisions and advances as time goes on. Budgeting and smart choices are key to getting this country financially stable. Yes it’s a long shot and somehow we are able to operate as well as we are nearly 19 trillion dollars later. How much is too much though? Is there a figure, a target figure that could send America over the edge? That’s the million-dollar question. If anyone knew the answer to this or the exact figure that would be the first step in creating a debt ceiling for the United States. Don’t max it out and allow for allowances so we don’t continue to overspend.    “The world economy almost came apart in 2007-2008 and still may do so under the whale-sized carcass of debt left behind by financial plunderers who leveraged it to get ever richer”(Fraser 68).  After 2008 our Economy went down the drain, and hasn’t been able to bounce back yet.  After reading this paper I hope that you will be more conservative spenders and keep the future of our country in mind. It would be nice to continue to be the greatest place in the world for many years to come. As an American citizen there is no better time to take action than now.      Works Cited  Allen, Michael A., and MATTHEW DIGIUSEPPE. "Tightening The Belt: Sovereign Debt And Alliance Formation." International Studies Quarterly 57.4 (2013): 647-659. Academic Search Premier. Web. 6 Oct. 2015. Breen, Michael, and Iain McMenamin. "Political Institutions, Credible Commitment, And Sovereign Debt In Advanced Economies." International Studies Quarterly 57.4 (2013): 842-854. Academic Search Premier. Web. 20 Oct. 2015. Dorn, James A. "The Debt Threat: A Risk To U.S.-China Relations?." Brown Journal Of World Affairs 14.2 (2008): 151-164. Academic Search Premier. Web. 6 Oct. 2015. Fraser, Steve. "Another Day Older And Deeper In Debt." Raritan 33.2 (2013): 67-82. Academic Search Premier. Web. 20 Oct. 2015. Glick, Reuven, and Mark Spiegel. "External Imbalances And Adjustment In The Pacific Basin: Conference Summary." Economic Review (03630021) (2006): 82-84. Academic Search Premier. Web. 20 Oct. 2015. Larson, Ann. "We Are All Debtors." South Atlantic Quarterly 112.4 (2013): 812-817. Academic Search Premier. Web. 20 Oct. 2015. Mcculloch, J. Huston. "An Improved Balanced Budget Amendment." Independent Review 17.2 (2012): 219-225. Academic Search Premier. Web. 20 Oct. 2015.  Sharma, Shalendra D. "China As The World's Creditor And The United States As The World's Debtor." China Perspectives 2010.4 (2010): 100-115. Academic Search Premier. Web. 6 Oct. 2015. Steinbock, Dan. "The Great Triangle Drama: The Euro Zone Debt Crisis, The U.S. Fiscal Cliff, And Chinese Growth Prospects." American Foreign Policy Interests 35.2 (2013): 108-118. Academic Search Premier. Web. 20 Oct. 2015. U.S. Debt And Soverign Wealth Funds." Brown Journal Of World Affairs 14.2 (2008): 175-181. Academic Search Premier. Web. 20 Oct. 2015.. Woods, Ngaire. "Whose Aid? Whose Influence? China, Emerging Donors And The Silent Revolution In Development Assistance." International Affairs 84.6 (2008): 1205-1221. Academic Search Premier. Web. 6 Oct. 2015