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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 US 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 US 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 Nixons 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 didnt 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 36 trillion in 1990 only one decade later Increase of National Debt Since 1980 Month Amount -------------------------------------------- 12311980 93021000000000 12311981 102872900000000 12311982 119707300000000 12311983 141070200000000 12311984 166296600000000 12311985 194594161645988 12311986
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