United States Budget Deficit

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United States Budget Deficit

"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. Also, the deep recession of the early 1980s reduced

revenues, raising the deficit and forcing the Government to spend much

more on paying interest for the national debt at a time when interest

rates were high. As a result, the national debt grew in size after

1980. It grew from $709 billion to $3.6 trillion in 1990, only one

decade later.

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...abilities, and deficit money is being

wasted. For example two of the largest portions of the budget:

defense and social security. Defense spending produces little or

nothing except in times of war. Judging by the current status of

the United States as the only existing “Nuclear Super Power” war is

not a tangible event in the near or distant future. The way social

security is managed creates a huge waste. As managed, social security

is money spent to immobilize a large and fairly capable part of the

work force. It encourages elderly people not to work by spending

deficit money on them. Reducing productivity and increasing the debt

at the same time. In its current state the U.S. should attempt to

reduce its deficit but eliminating it is not necessary and could do

more damage than good.

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