America faces a debt nightmare
The words “debt nightmare” may sound dramatic, but they accurately describe the economic reality facing America today. Over the past decade, a combination of unsustainable spending, rising prices and historic lows in income have created a mounting debt crisis with far-reaching consequences. It’s time to face the facts of our difficult financial predicament and explore ways to reverse the trend before further damage is done.
1. U.S. Awakes to a Taxing Debt Crisis
As Americans start to wake from their slumber in the first days of 2021, they are faced with the reality of a debt crisis that is only going to get worse. To add to this, the expectations for taxes for 2021 have gone up, leaving individuals and businesses feeling the financial squeeze.
Taxpayers can expect higher rates on their income, as well as reductions in deductions. Moreover, local governments have already started to implement taxes on digital services used by individuals and businesses, such as streaming platforms. Individuals and businesses will be feeling the added financial burden of:
- PAYE (Pay as You Earn) Tax
- Increased Property & Sales Taxes
- Corporate Tax Rates
- Capital Gains Tax
These taxes are certain to leave taxpayers feeling financially strained, and in turn, will limit economic activity and hamper the U.S. economic recovery. With January 2021 just around the corner, it is essential for individuals and businesses to take the necessary steps to understand their own particular tax situation.
2. Understanding the Scope of the Issue
Surveying the size and intensity of any problem is the first step for a meaningful solution. In such cases, the deeper you go, the better understanding of the issue you will gain.
To begin the process of understanding the issue, start by researching existing reports and scholarly articles. This will give you an excellent overview of the problem and prevailing solutions. Looking at data that compare years and other measurable indicators are also helpful to get an idea of the long-term trajectory of the problem.
Once you have a foundational understanding of the problem, it’s time to speak with affected people. Observe behaviours and ask questions. What practical needs do people have? How will their needs change over time? You can build off their experiences to get valuable insights interested parties may have not previously considered.
- Research existing reports and scholarly articles
- Review measurable indicators
- Speak to affected individuals
- Understand their needs
3. How the Debt Problem May Impact the Future
The effects of debt are far-reaching and may lead to daunting consequences for future generations. Our debt-dependent world has placed a heavy burden on the future, one that may be difficult to overcome.
Economic Impact – A growing burden of debt can lead to difficulties with economic growth, decliningworker productivity, and increased levels of poverty. This can also mean greater difficulty in obtaining capital and financing, which could limit technological advances and entrepreneurial efforts.
- Businesses who can’t access funds or invest may have trouble thriving and creating jobs.
- Individuals who have to borrow to cover basic needs or who are burdened by student loan debt may find it difficult to climb out of poverty.
- Stagnant economic growth could translate to less money for governments to provide services like infrastructure, education, and medical care.
4. Taking Action to Restore Fiscal Security
Implementing Actions For Restoring Fiscal Security
The first step in restoring fiscal security is understanding it in terms of the budget, revenue and growth projections, and economic trends. Tools such as economic forecasting and debt sustainability analysis help to understand the underlying dynamics of a country’s finances. With this information, it is possible to adjust policies and other interventions to restore fiscal security.
At the same time, it is necessary to take proactive actions to combat existing deficits and enhance revenue. This can be done through a combination of the following:
- Developing and implementing tax incentives for businesses.
- Critically evaluating current expenses to make sure only those necessary are paid.
- Maskenting effective public borrowing practices.
- Encouraging domestic investment and foreign direct investments.
- Adopting a balanced mix of taxes and market instruments.
The combination of these measures helps to reduce deficits and create a sounder financial footing, while also promoting economic growth. Government bodies should analyze the most suitable interventions in the current situation and implement them in a timely manner to bring back long-term fiscal security. The American debt problem is far from a nightmare, but one that can be improved and could create a more prosperous society if solved. As citizens, it is our responsibility to be conscious of the debt our country is in and take the necessary steps for reform. Let’s take this opportunity to grapple with the debt nightmare and turn it into a sweet dream of economic harmony and prosperity.