USA External Debt Tackling Strategies

The increasing public external debt of the United States of America is increasing precipitously. Both, the financial authorities of the United States Congress and the acknowledged financial analysts express their convergent opinion that the welfare of the upcoming generations is already seriously imperiled, unless fundamental preventive actions are taken.

Following basic financial assumptions, it can be anticipated that if present tempos of the external debt accumulation are held, the total external debt of the USA will become 91% of its GDP by 2025, 149% by 2040 and 415% by 2080. The payout of these figures cannot be done imperceptibly for the citizens of the USA. This paper examines four strategies that can be taken by the USA fiscal authorities in order to tackle the deficit of the budget, increase the state revenues of the United States of America, and evaluate prospective attitude of the officials to the proposed programs.

The Ways to Tackle the Increasing External Debt of the United States of America

Increase in the Taxes Accrued

Although this policy may not be heartily welcomed by the USA citizens and business communities, one of the ways to curb the tremendously increasing national debt is to increase taxes. The first option in the context of this approach is the introduction of the brand new 3% tax to every tax filer. Provided that this policy is conducted appropriately, it is possible to assume that 50 % of the entire external debt will be paid out within ten years after the program launch.

The second option within the tax-oriented approach is the extra tax on wealth for people and large scale business. If this strategy is implemented successfully, 4% tax from those who make more than $100,000 annually and another 23% of the total external debt of the USA can be paid out within a decade.

Comeback of the United States Military Detachments

A great many of military units of the USA are located overseas while the necessity to deploy them there has become obsolete with the downfall of the USSR. To illustrate, about 85, 000 of the United States military personnel are currently located in Europe, about 30, 000 are staying in Korea, although North Korea do not endanger the sovereignty and independence of their southern compatriots, and more than 2, 500 of the United States soldiers and officers stay in Japan, not to mention Afghanistan and Iraq where the biggest military presence of the USA is located.

It has been estimated that if 75 % of the troops were brought home, the Internal Revenue Service and the financial directorate could aggregate extra $ 212 billion, which can be transferred to close the growing debt. Besides, it seems to be a useful strategy if the expensive military research programs, like the development of the Space Tracking and Surveillance System, were minimized or replaced with the cheaper ones.

The Opinion of the Policy Makers

Definitely, the proposed alternatives are positive, but the Congress of the USA and the President of the USA are not prone to follow them. The biggest concerns are that the increase in tax collections may repel the loyalty of their electors, and the next elections can be totally lost in beforehand. Therefore, it can be accentuated that the decision to increase the tax duties have already been perceived and considered by the US government, and the only deterrent is the unwillingness of the Democrats to lose their political standings.


Having summarized the main points of this report, several inferential conclusions can be drawn. First and foremost, the ways to bailout the USA indeed exist. While they are economically salvational, the political circles of the USA view the increase in taxes for the large scale business and the minimization of the military-oriented programs mortal for their dominance on the both global and domestic political arenas.