Essay about U.s. Government 's Budget Deficit

Essay about U.s. Government 's Budget Deficit

Length: 1369 words (3.9 double-spaced pages)

Rating: Better Essays

Open Document

Essay Preview

The Concept of Budget Deficit in Relation to U.S National Deficit Incurred since 2007
The U.S’s debt level surpassed gross domestic product by 100%. The budget deficit increased due to the fact that the country tried to mitigate the effects of financial crisis in 2008. Indeed, the recession was prolonged and relatively deep. However, it is important to recognize that U.S’s deficit problem began four decades ago. This implies that the 2008 recession brought the U.S’s budget deficit to the public attention. The problem came as a result of increasing the government expenditure without corresponding to tax revenue. The paper discusses various aspects of the U.S government revenue and expenditure in order to understand different aspects of budget deficit.
The US government deficit is essential in understanding the current deficit problem. The problems contributing to the national deficit include financial crisis in 2008, the precedent financial behaviors, and deficit relative to GDP. The government allocates more money in areas such as defense spending, social security and Medicare, interest paid on the public debt, other federal expenditure, and other payment to individuals. Birkland (2014) argues that Social Security and Medicare, and other payment to individuals contribute to high level of budget deficit compared to defense spending. This is because Social Security and Medicare form part of the mandatory spending hence affecting the national income. Eichengreen and Gupta (2015) noted that the decline in discretionary spending in relation to government expenditure matches an increase in mandatory spending. In fact, discretionary spending decreased by 48% to the 36% of the total government spending. Therefore, so long as t...


... middle of paper ...


...itutions such as World Bank and International Monetary Fund spread loans through a long period of time. This increases the interest rate thus affecting the country’s income. Birkland (2014) argues that that high dept has caused unemployment and lower salaries in U.S. This is because investors fear investing in countries where the tax is high. In addition, the poverty level in U.S has increased (Bellofiore, 2013). This is because financial institutions ask for high interest rate on individual borrowing and mortgage. In fact, organizations investing in U.S are perceived to be riskier in the global market. This makes it difficult for foreign investors to build confidence in the country. According to Eichengreen and Gupta (2015), debts affect the economy in the long run; therefore, taking the right approaches to limit expenses will spur economic growth and development.

Need Writing Help?

Get feedback on grammar, clarity, concision and logic instantly.

Check your paper »

US Budget Deficit Essay example

- The annual United States budget has been steadily rising over the past decade. The projected federal budget for the 2012 fiscal year is going to be $3.7 million dollars compared to the $1.9 trillion in 2001. The 2012 budget is just a hundred million less than the 2011-year budget, according to the Congressional Budget Office. The reason for this ongoing rise in the federal budget can be acclaimed too the few financial crises that the country has faced. Beginning with September 11th attacks, to the housing bubble bursting, to the recession hit in 2007....   [tags: U.S. Government ]

Better Essays
1583 words (4.5 pages)

Strategies to Reduce the Federal Budget Deficit Essay

- Since the early 1970’s, Americans have had trouble controlling a huge money issue. The United States government has engaged in deficit spending. This occurs when spending exceeds the amount of income taken in (“Budget”). American politics have been trying to come up with ideas that the government can implement to fix our current deficit issue. Some strategies that the government may use are spending less, collecting more taxes, and balancing trade (“Atkins”). The federal deficit has become a big issue and Americans must try everything to reduce the debt....   [tags: government, spending, trade]

Free Essays
597 words (1.7 pages)

The Australian Federal Budget for 2014/2015 Essay

- ... Further cause risk of disequilibrium within the circular flow of income and disrupting economic growth. The Possible Impact of the 2014/15 Federal Budget on The Australian Economy Gareth Hutchens states in the Sydney Morning Herald that economist are predicting he levy will have a negative impact on consumer sentiment, and retail spending. This will decreases expenditure within the Australian economy and potentially increase unemployment. A disincentive of Australian workers to work harder as that will increase their income and have a rise on taxable income....   [tags: government spending, cuts, deficit]

Better Essays
1319 words (3.8 pages)

Essay about Examining the Budget Deficit in America: Concepts, Causes, Facts

- I believe that to understand the problem of budget deficit we need to understand the concept of fiscal policy. The most important source of government revenue is taxes. Government collects taxes from individuals, corporations, firms, and etcetera. Other source of receipts can be profits of the state enterprises and the firms selling the goods and services. In the USA they are not so numerous, but in the Western Europe and in developing countries have a little bit greater value: in Venezuela, for example, the oil sector belongs to the state, and in the beginning of 80th years provided a huge share of budgetary receipts - 77 %....   [tags: american government, financial]

Better Essays
757 words (2.2 pages)

United States National Deficit Essay

- Our National Deficit The national deficit is the amount of money our government owes, or the difference between the government expenditure and income. The government comes up with this number by using the federal budget. This takes the amount of the government’s income and subtracts their expenditures from that particular number. Whatever the total for the day is gets added to the total national debt, and it builds and grows daily. There is a difference between the national deficit and the national debt....   [tags: Government Budget]

Better Essays
1687 words (4.8 pages)

Impact of Budget Deficit Policy Essay

- I. Introduction With an outline development goal who will achieved through the policy of macro economy is in order to reach the level of unemployment is low gainful price stability, economic growth as expected and distribution income it equal. To achieve development goal the government allocated to finance through budget state that are arranged every year. One of the fiscal policies implemented that related to the budget is a budget deficit, a policy which the state revenues are less than the state expenditure....   [tags: politics, poverty]

Better Essays
1313 words (3.8 pages)

The U.S Budget Deficit Essays

- The U.S budget deficit over the years has been a problem but lately the deficit has shrunk. However, what made the U.S budget deficit get to where it is today and what will it be like in the years to come. Throughout the past the U.S has operated under a deficit. This means that the U.S Spent more money than it was taking in. The cause of the excess in spending was different depending on which year. Some of the causes were war, increase in spending , and economic downturns. There were different acts passed to try and control the deficit problem....   [tags: economic downturn, tax cuts]

Better Essays
1510 words (4.3 pages)

British Budget Deficit Essay

- How will the UK government bring the budget deficit down in the next five years. What will be the impact of this on the British economy. 1 Introduction Of late, the discussion of budget deficit in the UK has been more rigorous than ever. Based on the Public sector finances bulletin by the National Statistics, in financial year 2009/10, the public sector net borrowing was £122.4 billion. As compared to the figures in the same period in 2008/09, this is a staggering £54.6 billion higher. At the end of January 2010, the public sector net debt has amounted to £848.5 billion, which is equal to 59.9% of GDP of UK....   [tags: Economics]

Better Essays
1652 words (4.7 pages)

Budget Deficit & National Debt Essay

- The purpose of this paper is to discuss the short- and long-term effects of current budget deficits and the nation debt. In order to do this; I first had to find out exactly what they were. I will also discuss whether I think the government should operate with a balanced budget. Budget deficit is the amount by which total government spending is more than government income during a specified period; the amount of money which the government has to raise by borrowing or currency emission in order to make up for the shortfall in tax revenues....   [tags: essays research papers]

Free Essays
857 words (2.4 pages)

United States Budget Deficit Essay

- 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....   [tags: Research Economics American History Papers]

Better Essays
1606 words (4.6 pages)