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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 it is a bad thing and predict impending doom others say it is a safe and stable necessity to maintain a healthy economy For nearly 150 years the US government managed to keep a balanced budget The only time a budget deficit existed during these years was in times of war or other catastrophic events For instance the government created deficits during the War of 1812 the recession of 1837 the Civil War the depression of the 1890s and World War I However once each incident ended the deficit would be eliminated The economy was much stronger than the accumulated debt and would therefore 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 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 exponentially in size after 1980 It grew from 709 billion to 33 trillion in 1990 only one decade later See Table 1 Federal spending has grown over the years If you compare actual dollars and their proportion to the economy Gross Domestic Product or GDP much of it began in the 1930s Beginning with the New Deal the Federal Government came to play a much larger role in American life President Franklin D Roosevelt sought to use the full powers of his office to
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