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U.S. Budget Deficit - Good Or Bad?

Essay by 24  •  September 29, 2010  •  360 Words (2 Pages)  •  1,178 Views

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"Spending financed not by current tax receipts, but by

borrowing or drawing upon past tax reserves." , Is it a good idea?

Why does the U.S. run a deficit? Since 1980 the deficit has grown

enormously. Some say its a bad thing, and predict impending

doom, others say it is a safe and stable necessity to maintain

a healthy economy. When the U.S. government came into existence

and for about a 150 years thereafter the government managed to keep

a balanced budget. The only times a budget deficit existed during

these first 150 years were in times of war or other catastrophic

events. The Government, for instance, generated deficits during the

War of 1812, the recession of 1837, the Civil War, the depression

of the 1890s, and World War I. However, as soon as the war ended

the deficit would be eliminated and the economy which was much

larger than the amounted debt would quickly absorb it. The last time

the budget ran a surplus was in 1969 during Nixon's presidency.

Budget deficits have grown larger and more frequent in the

last half-century. In the 1980s they soared to record levels. The

Government cut income tax rates, greatly increased defense spending,

and didn't cut domestic spending enough to make up the

difference.

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