Reflection: Public Debt and Debt Structures

            Reflection: Public Debt       Student Name Instructor Name Institutional Affiliation Course Number and Name Due Date       Reflection: Public Debt Public and state needs are constantly increasing due to push and pull forces of growing demand for healthcare, infrastructure, education, or military projects. Public expenditures are usually sorted by revenue channels such as taxes, fees, duties, excise and import duties, court fines, and other numerous state revenue sources (Aybarc, 2019). However, states face public sector deficits because of escalating needs for infrastructure, wage bills, economic crises and bailouts, pandemics, government budget deficits, and development projects. Public debt represents state borrowed funds by the government or public agencies to finance operations and projects (Spyrakis & Kostios, 2021). Hence, governments resolve to borrow resources from other developed nations and prominent multinational financiers such as International Monetary Fund and World Bank. Casalin et al. (2020) indicate that experts classify public debt according to maturities, leading to short, medium, and long-term categorizations. Sources of debts encompass internal borrowings such as treasury bonds and external borrowing. Before enrolling in this program and handling assignments, I typically thought that America, as the world’s largest superpower, had a few billion dollars in debts and would be the financier to other developing nations. I assumed that America does not have to worry about its debt since its economy is the largest in the world. However, after gaining new knowledge on public debt and how the federal government structures its finances, my perceptions completely changed. I was appalled to realize that the country has a total debt of $30 trillion as of 2021 (Rappeport, 2022). Regarding the concept of the debt-to-GDP ratio, this figure sums up to 120% since the current gross domestic product stands at $20.9 trillion, meaning the nation’s debt surpasses the GDP (Patton, 2021). The debt is owed to financiers such as Japan, China, and the IMF. This data was enough reason to transform my notions on how the world’s superpower...