U.S. Budget Deficit Good Or Bad?

1455 words - 6 pages

Spending, financed not by current tax receipts, but byborrowing or drawing upon past tax reserves." , Is it a good idea? Whydoes the U.S. run a deficit? Since 1980 the deficit has grownenormously. Some say its a bad thing, and predict impending doom,others say it is a safe and stable necessity to maintain a healthyeconomy. When the U.S. government came into existence and for about a150 years thereafter the government managed to keep a balanced budget.The only times a budget deficit existed during these first 150 yearswere in times of war or other catastrophic events. The Government, forinstance, generated deficits during the War of 1812, the recession of1837, the Civil War, the depression of the 1890s, and World War I.However, as soon as the war ended the deficit would be eliminated andthe economy which was much larger than the amounted debt would quicklyabsorb it. The last time the budget ran a surplus was in 1969 duringNixon's presidency. Budget deficits have grown larger and morefrequent in the last half-century. In the 1980s they soared to recordlevels. The Government cut income tax rates, greatly increased defensespending, and didn't cut domestic spending enough to make up thedifference. Also, the deep recession of the early 1980s reducedrevenues, raising the deficit and forcing the Government to spend muchmore on paying interest for the national debt at a time when interestrates were high. As a result, the national debt grew in size after1980. It grew from $709 billion to $3.6 trillion in 1990, only onedecade later.Increase of National Debt Since 1980, Monthly Amount.--------------------------------------------12/31/1980 $930,210,000,000.00 *12/31/1981 $1,028,729,000,000.00 *12/31/1982 $1,197,073,000,000.00 *12/31/1983 $1,410,702,000,000.00 *12/31/1984 $1,662,966,000,000.00 *12/31/1985 $1,945,941,616,459.8812/31/1986 $2,214,834,532,586.4312/31/1987 $2,431,715,264,976.8612/30/1988 $2,684,391,916,571.4112/29/1989 $2,952,994,244,624.7112/31/1990 $3,364,820,230,276.8612/31/1991 $3,801,698,272,862.0212/31/1992 $4,177,009,244,468.7712/31/1993 $4,535,687,054,406.1412/30/1994 $4,800,149,946,143.7510/31/1995 $4,985,262,110,021.0611/30/1995 $4,989,329,926,644.3112/29/1995 $4,988,664,979,014.5401/31/1996 $4,987,436,358,165.2002/29/1996 $5,017,040,703,255.0203/29/1996 $5,117,786,366,014.5604/30/1996 $5,102,048,827,234.2205/31/1996 $5,128,508,504,892.8006/28/1996 $5,161,075,688,140.9307/31/1996 $5,188,888,625,925.8708/30/1996 $5,208,303,439,417.9309/30/1996 $5,224,810,939,135.7310/01/1996 $5,234,730,786,626.5010/02/1996 $5,235,509,457,452.5610/03/1996 $5,222,192,137,251.6210/04/1996 $5,222,049,625,819.53* Rounded to MillionsFederal spending has grown over the years, especially starting in the1930s in actual dollars and in proportion to the economy (GrossDomestic Product, or GDP).Beginning with the "New Deal" in the 1930s, the FederalGovernment came to play a much larger role in American life. PresidentFranklin D. Roosevelt sought to use the full powers...

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