Journal Reflection: Government Revenue and Government Spending

Journal Reflection: Government Revenue and Government Spending
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Q.1
The core message in the video is the impact government revenue and spending has had on the current U.S. economic crisis. By 2009 when President Obama became president, the country was looking at an eleven trillion unsustainable debt. The debt had risen to this magnitude owing to poor economic decisions by adopting a lifestyle and entitlements that were beyond the country’s revenue without a mechanism to caution it (Yellin et al., 2009). Hence, the government is in a financial hole, with questions on dealing with it while promoting economic development despite the budget deficit lingering in everybody’s mind.
Q.2
The U.S. deficit rose dramatically during President George Walker Bush’s administration from 2000 to 2008 because of unsound economic decisions, the war in Iraq, and the adoption of the Medicare Part D program. Unsafe financial choices contributed to the high rise of the U.S. deficit. President Bush inherited a healthy economy in 2000, boasting of a budget surplus. However, he implemented two substantial tax cuts that mainly gave the wealthy back their money (Yellin et al., 2009). As a result, they created a budget deficit, which was replenished through additional borrowing.
The second reason for the increase was the war on Iraq. After the 9-11 attacks, the Bush administration implemented a host of measures to protect the country against terrorism, among them going to war with Iraq. With the country already reeling from an economic crisis caused by the tax cuts and the terrorist attack, and no drastic measures to raise money or increase taxes, the government could not afford the war (Yellin et al., 2009). Nevertheless, President Bush took the country to war, which cost over fifty billion dollars borrowed from China and other countries, further increasing the budget deficit.
The adoption into law of Medicare part D was another reason for the increased deficit. The Medicare insurance program provided Americans aged sixty-five and above free medical coverage. However, the addition of prescription medication coverage raised the cost of the program to sixty million a year, translating to eight trillion dollars to date (Yellin et al., 2009).
Q.3
Offering corporations money grants, tax relief, and government subsidies, commonly referred to as corporate welfare, directly causes the U.S deficit. On estimate, the U.S. government spends one trillion dollars on business aids yearly to caution large corporations against losses and business risks. The practice is counterproductive as it does not stimulate sufficient capital accumulation (Bandow, 2018). Knowing that the governme...