A national debt refers to the amount that a state owes. It is also referred to as government debt or public debt. National debt is measured by the value of the treasury securities that are outstanding. The securities are usually issued by either the treasury or federal government agencies. Gross national debt consists of the debt that is held by the government accounts otherwise known as intergovernmental debt. The other component of gross national debt is the debt that is held by the public. Generally, the amount of debt held by the public is reduced through taxation and increases through government spending (Wright 14).

You're lucky! Use promo "samples20"
and get a custom paper on
"Fixing The National Debt"
with 20% discount!
Order Now

The United States debt is currently soaring at over 17.5 trillion. This amount exceeds the yearly output of the United States measured by GDP (Gross Domestic Product). The last instance when the debt to Gross Domestic Product ratio was over and above 100% was to finance the Second World War. A country is said to be in debt crisis when it is in danger of being unable to meet all its financial obligations. Usually, the first indicator of a country being unable to meet its financial obligations is when it is unable to get low rates of interest from its lenders. This is because the investors are worried that the country may not be able to pay bonds it has sold and would, therefore, offer higher rates of interest to mitigate against this risk (Newman 112).
The United States is experiencing the above. National debt is expected to hit 21.8 trillion by the year 2015. Stringent measures need to be taken to reduce this level of national debt. Below is an outline of some of the solutions to the United States national debt crisis.

The economy needs to be operating at a budget surplus to be able to deal with the debt crisis. In the recent past, the United States has focused on reducing entitlement spending. It is however time that the government increased taxes so as to be able to collect more funds from the public to be able to offset the huge national debt. The challenge with this method is that it may not be in compliance with the characteristics of a good tax system. Many Americans are also not willing to pay excessive taxes or eliminate entitlement spending. This brings a problem in the actual implementation of such a solution. Excessive taxation may also lead to a decrease in the money supply leading to problems associated with excessive demand for money (Wright 56).

The main way of dealing with a debt crisis is simply operating a budget surplus. A budget surplus can only be achieved by increasing the amount of income the government receives. One of the untapped sources of income is the trading of marijuana. For this to happen, it must however be legalized. In addition to reducing the cost incurred for prosecution, legalizing marijuana would lead to collection of taxes by the government. The United States is missing out on generating billions of dollars by avoiding this measure. The main challenge of legalizing marijuana is that using it as a controlled substance cannot be guaranteed, and the government may incur health costs as a result.

The United States spends more than most countries combined on national defense. It has more firepower than is necessary for example. Cuts in military spending will lead the country to save millions of dollars which are much needed. The reason this approach has not yet been implemented is largely political and may, therefore, prove difficult to bypass (Tanous & Jeff 67).

Overall, the main focus of the United States in reducing national debt and maintaining it at desirable levels should be reduced spending by both the government and the public. The second measure should be to find alternative ways of generating income for the government.