U.S. National Debt Research Paper Example | Topics and Well Written Essays - 1750 words

U.S. National Debt - Research Paper Example Federal governments borrow through issuing government bonds,securities and bills.In other nations government can borrow direct from organizations such as World Bank or other international institutions (Michael S.Weisbach). Only public debt is indicated as a liability on theUS federal government’s consolidated financial statements(Thornton). Debt held by federal government accounts is treated as an asset to those accounts however it is treatedas a liability to Treasuryaccount; the valuecounsel out each other in the consolidated financial statements.Federal governmentexpenditures and receipts are presented on a cashnotaccruals basis. However, the accrual method may provide useful data on long term effects of the governments annual operations. The US national debt is expressed as public debt ratio to GDP(gross domestic product). The debt ratio to GDP may decrease due of gross domestic product, government surplus or inflation (Alycia Chin). Deficitis thedifference between receipts and outlays for each year.US government generates revenue from excise, income, social insurance taxes and fees.The income generated is spent on service provision, social security, and research and debt payment. Deficit arises when spending exceeds income level. In such a case the government must borrow in order to pay its bills. Publicdebts differ from deficit in that public debt is the accumulated deficit plus off budget surpluses. Items included while calculating deficits are considered as either off-budget or on-budget.Governments borrow money needed maintain government operations. It borrows money by selling securities such as bonds, treasury bills, notes and savings bonds to the public. Treasury securities sold to the public and Intragovernmental Holdings amounts to total debt. Historically, US national debt has increased during recessions and wars, and declined subsequently. The debt ratio to GDP may decrease due of gross domestic product, government surplus orinflation.