Essay on the Economic Future of the United States

In the first quarter of 2016, the White House released the annual economic report summarizing the state of the economy. The information provided an analysis of the past trend and the predictions of how the condition of the United States will be in future. In 2008, most of the Americans had fears that the system of the economy would collapse and were uncertain about the security of the financial institutions (Rampell, 2011). In the early 2009, the rate of unemployment increased following the effects of monetary crisis in 2007 and 2008. Also the Gross Domestic Product declined from $14718 to 14418 billion. In 2010, the economic growth was 3.2% from 2.6% in 2009. Things were better off in 2010 but not close to the expectations of the Americans in terms of unemployment.

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The slowdown resulted from increased imports and government expenditure. In 2011, the economy expanded at a faster pace because of shrinking imports and rising exports. However, in the second quarter of the year, the economic growth was below the expectations of the government and the rate of unemployment was 9.4%. Timothy Geithner, the Secretary to the Treasury said, brutal job cuts early in the recession consign us to a tragically more moderate reduction in unemployment as the economy recovers (Rampell, 2011). There were expectations that the economic growth would exceed 10% in 2012 but this was not achieved because of the spillover effects from the global situation. From 2012 to 2016, U.S experienced improvement in GDP regardless of some challenges. Given the historic analyses, there are expectations about the situations in the United States in future as new administration takes over. The graph below shows the state of economy from 2008.

The debt in the United States has remained at 18 trillion USD from 2013. Debates on how to reduce it implies crisis every moment. Also balancing of the budget means reduction in unfunded items, tax hikes and military expenditure. As the government struggles to resolve various issues affecting the United States there are uncertainties about federal programs, benefits and tax rates. However, there are hopes that the economy will be progressive from 2017 to 2025 on various accounts.

It is expected that the Gross Domestic Product of the United States will increase by approximately 3.8% by 2020 and 5% by 2025. In the past few decades the government has spent more money than what it receives. The only time when it was able to balance its budget was between 1998 and 2001. Since 1945, the fiscal deficit in 2009 at 9.8% of the Gross Domestic Product, however, it has dropped by 2.4% in 2015 ("US Federal Spending Analysis - Charts Tables History", 2016). The existing laws impose a large proportion of spending, with significant amount of money allocated to the entitlement programs like the Medicaid and Social Security. The remaining amount is called the discretionary expenditure based on the annual federal budget. Half of this fund is spent on defense and military while the other proportion is used in public services and government programs.

The government covers the preventive medical services if the In-Network providers are utilized. Some of the prescriptions are outlined in ACA with no co-insurance or deductibles. The IU health plan covers all the services with deductibles of $2500 per employee and $5000 in other areas every year. The federal government through deductions covers approximately 80% of the health care costs. With President-elect, Donald Trump expected to make significant changes in the Affordable Care Act where there will be no requirement of mandatory deductions, the government will increase the amount of money spent on health care to address the existing problems in the American population.

Military budget is one of the parameters used to measure defense power. Policymakers are debating about the appropriate level of expenditure because of the constrained budget as well as winding wars of Afghanistan and Iraq. The chart below shows the historical trends in military spending from 1988 to 2013.

In 2013, the military expenditure decreased to $619 billion from $671 billion in the previous year. In any country, spending in defense depends on changes in income as well as allocation of that revenue. An increasing share of military expenditure based on rising GDP is more sustainable than spending more of the output at the expense of other sectors. If the current situation prevails, then the amount of money spent on defense will be less when compared to 2015. On the other hand, there is likelihood of government to increase its spending by 2025 if there will be conflicts in neighboring countries. Also, given the Trump policies on this issue, in four years time, there are expectations of more money allocated to the military in line with the GDP. In 2008, the amount spent on education was 4.3% of the GDP, however, there was a decline in 2015 to 3.1% following the change of policies where the state governments were allowed to control most of the schools. If this adjustment is maintained for the next 10 years then the expenditure on the sector will further decrease when compared to 2016.

References

Rampell, C. (2011). U.S. Economy Grew at 3.2% Rate in Late 2010. Nytimes.com. Retrieved 3 December 2016, from http://www.nytimes.com/2011/01/29/business/economy/29econ.html

US Federal Spending Analysis - Charts Tables History. (2016). Usgovernmentspending.com. Retrieved 3 December 2016, from http://www.usgovernmentspending.com/federal_spending_chart