$1 Trillion Budget Deficit, What are the Chances for Common Man?

This dark cloud has been hovering over us for over a decade and it has been ignored by the decision-makers for just as long. Based on the findings of TreasuryDirect.gov, it is indicated that the US national debt is the largest in history at a deficit of $1.2 trillion (with interest of approximately $460 billion) estimated for fiscal 2009. The US is facing the worst-ever economic crisis within the country and it is affecting people around the world.

This budget deficit has become a multifold problem for the common man. This national debt has reached our daily lives and the huge number of $1 trillion is more than most people can understand. It just indicates a huge national problem.

This amount is the second highest expenditure on the US budget and, if the nation could skip paying this amount on national debt for about an year, the government can look into ways of relieving the problem by:

• Taking care of the payment of the entire education budget of the United States six times over
• Reducing federal taxes by 33% for all Americans
• Pay every citizen of the United States $1,500

It is believed that, to ward off the economic crisis, the common man will finally be paying for this crisis directly and indirectly. Directly, the common man will be paying more in the cost of borrowing or as a business entity. Whereas, indirectly, with credit becoming harder and more expensive to borrow, there will be slowdown of the economy.

With respect to subprime mortgage and the economic crisis, most banks offered dream homes for all, whether they were capable of paying back the debt or not. Those who were incapable of paying back the debt but had credit offered to them were called ‘subprime’ borrowers. This led to the banking system going flat and dooming it to the economic crisis. The common man was the one who suffered most. Eventually the economy will bounce back and laws are already being put in place for the benefit of the common man. The difference in prime and subprime mortgage lending system has led to the formation and augmentation of Mortgage-Backed Securities (MBS) market to ensure that this problem will not recur any time in the near future.