When ‘Deficit’ Isn’t a Dirty Word by Robert H. Frank

The national deficit in 2015 was $435 billion, which means the U.S. government spent $435 billion more than it brought in. This consistent overspending has led to a debt of over $19 trillion dollars. When pondering these incomprehensible figures it is important to consider the causes that led to this financial dilemma, and the effects such a huge debt will have on society.

A balanced budget plan must be inacted to restrict the governmental bias toward spending to generate a few more surpluses that eventually will balance the deficits incurred. The terms of the balanced budget must cover a range of years, not a yearly proposal, so that an expansionary fiscal policy in the face of a severe recession can be used. Cuts must be made in the budget, but more important the choices for where the money will go must be

The growing national deficit is a looming problem in the United States now more than ever. The national debt is constantly increasing and government spending is out of control. If these issues are not solved then they could spell disaster for the nation’s economy when the infamous debt ceiling is finally reached. Currently the national policy on the debt is to continue raising the debt limit until a solution is found that is agreeable between both parties in Congress. The two main issues of over spending and the constant raising of the debts ceiling by Congress can both be resolved by government spending reform, balancing the federal budget and initiating pro-growth policies in order to increase the government’s tax revenue.

Many contend that deficit reduction is imperative to our prosperity and economic recovery. The deficit is blamed for a variety of economic ills including high interest rates, unemployment, the trade deficit, the low rate of national saving and low productivity growth (Shaviro, 1997).

Any person struggling through difficult times will seek out other means of financial support including borrowing money that may be harder to pay back in the future. The United States will often follow a similar path and spend more money than it earns. Deficit spending in the United States comes with some advantages, disadvantages, and strong criticism. Some feel deficit spending is good for getting the economy back in motion while others contend it does nothing for the economy. The effects of deficit spending are carefully examined to determine if the United States is improving or degrading the future of the economy.

The federal budget is known as the notorious economic tank from which money is distributed to various programs. The money used every fiscal year, which begins October 1st and ends September 30th the next year, belongs to the people. The government raises this money through taxes and they spend it on national defense, Medicare, and social security. The federal budget is an exercise in making choices, and those options will certainly affect individuals living in the U.S. These choices cause debt to pile up on the government, who is struggling to make it disappear. The deficit and debt of a government gauges how well it is being run and how well it has been run in the past. According to The Economist the national debt is the total

In our textbook, “Principles of Macroeconomics,” the relationship between debt and deficit is described. A deficit is a shortfall in revenue for a particular year’s budget. Whereas, a debt is the total of all accumulated and unpaid deficits. An outlay is an amount of money spent on something. The federal government outlays are divided into government outlays and mandatory outlays. Government outlays are the part of the government budget that includes both spending and transfer payments. Mandatory outlays constitute government spending that is determined by ongoing long term obligations. Of the two, mandatory outlays is the largest portion of the federal budget. Lastly, Discretionary outlays compromise government spending that can be altered when the government is setting its annual budget. A budget surplus occurs when revenue exceeds outlays. A budget deficit occurs when government outlays exceed revenue.

There are a number of both long and short term effects that a large budget deficit/debt can have on an economy. First, there will be increased borrowing, meaning the government will need to borrow from the private sector (Pettinger, 2014). Second, there will be higher debt interests payments, meaning selling bonds will increase the national debt, leaving future generations to have to pay higher taxes (Pettinger, 2014). Third, an increase in aggregate demand will occur, which could potentially cause a higher Real GDP and inflation to

Fixing the national debt is a coservercal issue within our government. Since the two parties have opposing views on how to fix it, it creates gridlock on the process of creating a plan to reduce it. (Perdue, 2015) Our federal government debt has extensively tripled since the year 2000 (see appendix A) (Historical Debt Outstanding Annual 2000-2015,2015), today our debt is a tad bit over nineteen billion. (U.S.NationalDebtClock.org , 2016) We have arrived at his point through the imbalance between revenues and spending, fueled by ever-high interest rates. Which will approximately result with us reaching ninety percent of GDP. (Greife, 2010) The government has no revenue. Therefore, the money it receives comes from the people and the

Written in mid 2011, in “What They Don’t Know About the Deficit” Fred Barbash writes about the fact that the average American knows little to nothing about the budget. He says that 30% of the American population believes that at least half of the American budget goes to foreign aid when in reality it is closer to .6%. Barbash then proceeds to delve into the reasoning for this problem with the average American he explains, “It isn’t that they don’t care… It’s that they don’t know.” (Barbash 8). His statement proves the fact that nearly all Americans say the national budget is a big deal, but almost no one knows what it truly is. Barbash proposes that people lack the knowledge of national governments spending because Americans do so much in

The United States has adopted a persona of uncontrollable spending policies, and short term solutions. As the spending trajectory continues in a downward spiral, fueled by unsustainable policies, and current tax revenues, the national debt continues to grow. For many years, the United States has implemented policies that failed to address mandatory spending costs, which, unfortunately continue to outpace the national economy. Furthermore, Congress has created a habit of introducing short term solutions in order to confront a long term issue of national debt. Although, there are many driving forces behind the U.S. fiscal problem, mandatory spending

The Federal budget deficit is the amount of spending by the Federal government that is in excess of how much money the government brings in annually. While the Federal budget deficit has steadily decreased overall during the past fifteen years, our Federal debt continues to grow at a drastic rate. A review of how the Federal deficit has evolved over the past fifteen years, the rate of growth of the Federal debt during that same period, and how the two are connected will better explain this phenomenon.

For as long as Americans can remember there has always been a federal deficit. In fact, the only time in American history when there was no federal debt was under president Andrew Jackson, and it only lasted a single year(Wall Street Journal). The federal government never managed to pay off the debt again, although some administrations, like Coolidge’s and Clinton’s, have managed to run brief surpluses(Wall Street Journal). Yet today there seems to be no limit on the debt and deficit spending, and a key question has been pressed into the forefront of politics and fiscal policy, “is

Throughout most of the country’s history, the United States’ federal government maintained a reasonable level of national debt. For example, the total national debt in 1981 was $998 billion. Since then, however, the government has generated significant budget deficits, and the level of debt has risen to $16.7 trillion in 2013 (Calleo, 39). Budget deficits are caused

Carbaugh (2011) asks, "Can the United States Continue to Run Current Account Deficits Indefinitely?" (p. 361). Ultimately in the long term the answer is no, but the question could be rephrased to ask: (1) Does the United States' unique position in the world economy allow the country to safely run persistent external deficits? and (2) can persistent U.S. deficits in the current and payments accounts be adjusted without bringing about economic recession or crisis? Japan, China, and Middle Eastern oil countries have enabled this deficit to continue by heavily investing in U.S. Treasury securities (Carbaugh, 2011). Because foreigners desire to purchase American assets, Carbaugh (2011) concludes that “there is no economic reason why [the