Maintaining a budget deficit, on the other hand, drastically hurts the stability of the U.S. economy. Argument 2: A budget deficit harms the United States through creating a trade deficit and increasing the national debt Almost everyday on the news one hears something about the Federal deficit and the U.S. budget problems. Currently, the Federal deficit is over five trillion dollars, and that divided out among the U.S. population equals over nineteen thousand dollars per person. This enormous debt couldn't have been created overnight. The government's failure to balance the budget resulted in both the large trade deficit and large national debt. First, the government needs to focus on the trade deficit. Lowering the budget deficit will help the American public with national savings which, in the long run, will rescue the trade deficit. "The ballooning federal deficit had cut national savings far below the nations investment needs. As a result, the U.S. had to import capital from overseas, which inevitably resulted in a trade deficit" (Koretz 1). The main point of all this is that private savings is down, and needs to be brought back up. "Thus, while the public sector's saving performance has improved mightily in recent years, America's household savings rate has plummeted to its lowest level in 39 years "leaving the U.S. still highly dependent on foreign capital (Koretz 1). Another key point to this issue is high foreign debt. By 1997, the U.S.'s "net foreign debt was more than 1 trillion and was increasing at an annual rate of 15 to 20 percent, with Japan owning almost $300 billion and China more than $50 billion in U.S. treasury bonds" (Huntington 28). Eliminating this foreign debt would be another good step in the right direction for the U.S. government. The second obstacle is that the national debt is troublesome. The national debt and interest payments mean higher taxes. The interest on this debt is growing everyday, and something needs to be done so taxes don't keep getting higher to pay for it.
