Introduction
Like any other institution, the government requires money to funds its daily operations in order to meet societal needs hence sustaining the process of social and economic development. Therefore, to ensure that these funds are utilized in an effective manner, both the state and federal governments prepare budgets that give a detailed description of the amount of the projected funds that might be utilized within a specific financial year and the manner in which these funds will be allocated within the different wings of the government (Bendavid 9). Given the diverse nature of this topic, this paper will specifically focus on the federal budget and lay a special emphasis on the budgetary considerations of the 2013-2014 financial year.
The 2013-2014 Budget
According to the constitution of the United States of America, the budgetary considerations are usually presented by the sitting president (Bendavid 14). In this respect therefore, it has been the duty of president Barrack Obama to issue the government spending request. To ensure that this process is effective and efficient, the constitution has specifically developed a process called the United States Budgetary Process that has to be adhered to. In accordance to the specifications of this process, the appropriations that have been presented by the president need to be enacted by two bills by the Congress (Mervis 17). Once the budgetary considerations have been approved, the Budget Control Act acts as a watchdog to ensure that the funds are spent in accordance to the approved considerations. This is essential since it prevents acts such as fraud and misappropriation of funds by the government. It also increases the level of accountability from the government.
At the present moment, the 2013-2014 government expenditure is budgeted at $3.778 trillion (Mervis 18). However, this proposed budget needs to follow the processes that are stipulated in the United States Budgetary Process before it can be approved. However, from a critical point of view, it is evident that the proposed budget has surpassed the expected annual revenue within the same financial year. According to Mervis (2013), the USA annual revenue for the 2013-2014 annual year is projected at $3.034 trillion. This therefore asserts that the government will be operating at a deficit of $744 billion.
According to analysts, a number of factors can be attributed to the budgetary deficit of the 2013-2014 financial year. The 2007-2008 recession that hit the United States of America and the world at large is considered to have a critical role in the current deficit that the US government is experiencing in its federal budget. To overcome the effects of the 2007-2008 recession, president Barrack Obama launched the economic stimulus package in the year 2009. The cost of this package was approximated at $787 billion whose aim was to enhance the income of average Americans by increasing the level of unemployment benefits. At the same time, this package funded various public projects in a bid of increasing the number of jobs available to Americans hence increasing the overall of employment within the nation through direct or indirect employment. The aim of this fiscal policy was to boost the US economy out of the recession. This policy became successful and its impacts started to be felt in the second quarter of the 2009 financial year. Despite its results however, this policy increased the overall expenditure of the federal government. Consequently, the recession period was characterized by a reduction in the government revenue. For instance, the revenue of the federal government reduced from approximately $2.7 in 2007 to $2.1 in 2009. Another factor that has been attributed to the increase in government expenditure has been the war on terror especially after the 9/11 attacks which resulted in the operation in Afghanistan and Iraq. Finally, the overall government expenditure has increased due to the increase in public demands. It is the obligation of the government to pay for social security, medicare, research and development, internal security and so on. These increased expenditures have further increased the overall budget of the federal government.
It is due to this fact that the federal government is planning to overspend during the 2013-2014 financial year. However, despite the fact that ordinary American residents do not want to increase their spending, the president and the Congress have no other alternative but to increase the overall budgetary requirements in order to sustain the national economy. From an economic point of view, the US federal government is increasing its expenditure in order to stimulate the economy. Furthermore, there are many other nations that are willing to lend the United States of America money to fund its federal operations (China for example). From a political point of view, the main aim of the government is to increase the level of available jobs in order to curb unemployment. In this respect, the government is willing to spend more money in order to create these jobs as a means of increasing the average income of Americans hence raising their living standards.
Conclusion
Despite the fact that the US government is operating on a deficit government, the nation is still in a favorable position of getting financial aid from other nations. This is due to the long financial stability and development that the nation has been exhibiting over the years. However, the government should strive to ensure that the debt to GDP ratio does not pass the 90% mark since this will force the debtors to demand their money back and result into a financial crisis that is similar to the eurozone crisis. Therefore, the government should put effective measures to reduce the budgetary deficits in the coming years to guarantee the sustainability of the US economy.
Works Cited
Bendavid, Naftali. “Congress’s Deficit ‘Bomb’: Scary or Not?”. The Wall Street Journal 2.1(2011): 5-17.
Mervis, Jeffrey. “Congress Completes Work on 2013 Spending Bill”. ScienceInsider 3.1 (2013): 14-21.