Friday, December 10, 2010

National government and it's spending

I strongly agree with Jimmy's post about "My thoughts about government". Yes, National government should focus more in its internal Issues rather than focusing on wars around the world. U.S known as the one of the powerful country around the world and it should be like that. National government is like a credit card and State government is like a debit card. The government does not have any money; it takes our money from us, and borrows more, then spends that. Suppose you want to spend more money this month than your income. This situation is called a "budget deficit". So you borrow (i.e; use your credit card). The amount you borrowed (and now owe) is called your debt. You have to pay interest on your debt. If next month you don't have enough money to cover your spending (another deficit), you must borrow some more, and you'll still have to pay the interest on the loan. If you have a deficit every month, you keep borrowing and your debt grows.  If we keep on borrowing money from other country (like China, or any foreign country) then, soon the interest payment on our loan is bigger than any other item in our government budget. Eventually, all we can do is pay the interest payment, and we don't have any money left over for anything else and interest payments on that debt will become the largest item in the federal budget. Right now, U.S is facing economic issues and it’s affecting every states. Recently, Texas is cutting back in its budget, and they are planning to cut government Medicaid like CHIP, other Medicare too.  Many people is going to affect by this decision. 

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