June 6, 2008

On the American Economy

There are many different challenges facing the American population and economy in the upcoming months and years. However, long-term economic problems remain the same for all Americans. There are really two major problems that threaten the United States, those being the need to stay competitive in the global jobs market and the need to greatly reduce the national debt of the nation. These two problems are by far the worst facing the United States and have the serious potential of knocking America off from its perch as the world’s strongest economy.

The biggest issue for America in terms of economics, however, is to remain competitive in a global job market. As wages become cheaper in other nations, and as laborers in those nations become more skilled, it is very likely that many jobs currently possessed by Americans will leave this country, creating higher unemployment. Ultimately, economic growth will depend entirely on whether companies want to continue to hire Americans, and nothing else. Should the American population become more educated and skilled, then economic growth will continue. However, a lack of desire to address the concern of global competitiveness will result in a decrease in the strength of the American economy.

The solution to this problem is simple: encourage education and immigration. If Americans fund education at all levels more and encourage learning, then the workforce will become more skilled and thus more desirable to companies from across the world. Encourage immigration means that the best minds in the world would jump at the chance of working in the United States, increasing the overall attractiveness of our workforce. These two steps would mitigate the long term concern of American competitiveness in a global job market.

The second biggest economic concern for the United States is the national debt. The massive size and crippling interest payments of the national debt threaten the economy. The most obvious way that this is done is through the interest payments that the government has to make. Not only does making these payments prevent the government from domestic spending which would encourage the growth of GDP, but paying the interest on the national debt is essentially causing a capital outflow from the United States. The national debt also allows other countries like China or Arab nations to hold control over our economic policy through their massive holdings of government bonds and securities. The negative consequences of a large national debt, especially for the economy, make it imperative to reduce it.

In order to best reduce the national debt, a combination of tax increases and spending cuts would be necessary. Much of the funding for the Iraq War would have to be diverted away towards the national debt and many of the tax cuts currently in place for the rich would have to be repealed. These measures will allow the national debt to be reduced and free up government spending for other areas of the economy and country.

In the end, the ability of the United States to address its two biggest problems, global competitiveness and the national debt is strong. The US can encourage education spending and immigration, and it can increase taxes and reduce spending to retire the national debt. These measures will assure the long term strength of the US economy.

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