American Government

American Government

Cassidy Bennett

Federal Budget Deficits and Debt

Explain the concepts of a balanced budget, a budget deficit, and a budget surplus.

A balanced budget is when the revenues are equal to the expenditures. A balanced budget helps to avoid deficits, which happens when the expenditures are higher than the revenues. A budget deficit is when as stated above, when the expenditures exceed the money coming in. Budget deficits can be countered by increasing taxes and lowering government spending. A budget surplus is the exact opposite of a budget deficit. It's when the expenditures are lower than the revenues.

How does the government cover its deficits in any one year?

The government can cover its deficits by selling treasury bonds. Anybody can purchase a treasury bond or other types of securities straight from the treasury website, brokers, or banks. The way this works is that whoever is buying the bond is loaning the government money. In return, the buyer will receive a payment that has increased with interest after a while.

What makes up the national debt and how much is it? How fast is it growing?

There are quite a few things that make up the national debt. One of them happens to be George Bush's tax cuts. They added roughly $1.6 trillion dollars to the national debt. The tax cuts are still on going as well, so they continue to add up every year. Another factor that has added to the US national debt is the health care entitlements. New Medicaid, along with other entitlements, have increased the governments spending to a whopping $1.1 trillion dollars. $1.3 trillion dollars is also added to the debt because of the wars in Iraq and Afghanistan. These are a just a few of the many things that make up the debt. The current debt is a total of $17,236,887,590,658.73. However, this total isn’t even relevant anymore, as the debt is rising every second. The US national debt is increasing by $2.68 billion dollars per day....