The Twin Deficits in the Economy of the United States
The twin deficits are definitely back. People that do not know what twin deficits are? The Twin deficits are the current account deficit and the federal budget deficit. The current account deficit measures the flow of money from and to other countries and measures merchandise Trade. If you put it in short words, it means exports minus imports of goods and services. The Federal budget deficit is a government’s debt. It happens when an entity spends more money than what it has. A brief surplus of Clinton’s Administration has been replaced by the deficit of Bush’s Administration. Today, “the current account deficit is larger than it has ever been, close to 800 million dollars, which is 7% of US GDP” (Gongloff 1). The Federal Budget deficit is around 9 trillion dollars. As you can tell, the US government is in a serious debt, and with the government spending giants amounts of money in the Iraq War, Homeland Security, Tax cuts and other measures, it is going to keep feeding the US deficit, which is the largest it has ever been in history. This paper addresses the many challenges of the current account deficit and the Federal budget deficit, plus analyzes the history of the deficits, what the deficits mean to the economy, how are they going to affect the US and global economy and the reasons why people are afraid of investing in the US economy.
In the next chart, people are going to realize how bad the US debt is. As people know, before President Bush came into power, the economy of the United States had a surplus. Since Bush came into power the economy of the United States has owe money dramatically. In 2000, the US debt was about $5 trillion; in 2007 it was about $9 trillion. The problem is not only that the defici ...