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Learning to Love Deficits The United States Deficit has been a problem for over 40 years But is it really a problem As certain evidence will show having the country run a deficit for a few years may not be a bad thing Of course if we were in a perfect system we would never have deficit spending and the budget would always be balanced This was true in 1998 when President Clinton was able to with the help of congress attain a balanced budget and have a 2188 billion surplus in 10 years It was the first time in over a generation that we had witnessed a balanced budget or a surplus for that matter This year however is much different our deficit is currently 159 billion and growing This is due by part in increasing unemployment and rising inflation rates across the country causing a cyclical deficit The cyclical deficit only reflects the impact that the business cycle or macro economy have on the federal revenues We can use the structural deficit to show us what effect the fiscal policy decisions will have on our economy Government can then decide after adding the cyclical balance and the structural balance together what the total budget balance must be Then they can enact the fiscal policy levers needed to bring the economy back to equilibrium Some fiscal policy levers include cutting taxes increased government spending on certain stimulus packages and the issuing of bonds We have found in study after study that increased government spending when done wisely will stimulate the economy more than a tax cut for less money When we divide the aggregate demand shortfall with the multiplier we get the desired fiscal stimulus package total These packages bring new jobs and new services and upgrades to our cities and states This is one of the best ways and a reason why running a national debt may not be a big
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