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Beginning with the New Deal in the 1930s the Federal Government came to play a much larger role in American life President Franklin D Roosevelt wanted to use the full powers of his office to put an end the Great Depression He and Congress greatly expanded Federal programs Federal spending which totaled less than 4 billion in 1931 went up to almost 7 billion in 1934 and to over 8 billion in 1936 Then the US entry into World War II sent annual Federal spending to over 91 billion by 1944 Evans 7-9 As the federal government thus became a primary participant in the nations economic activity the era of big federal government spending began Davis 18 However is running a deficit a good idea There are several reasons that show how it is both good and bad What if the debt is not increasing as fast as we think it is The debt may increase in dollar amount but often times so does the amount of money or GDP to pay for the debt This gives us the idea that the deficit could be run without cost How then could a deficit increase productivity without any cost The idea of having a balanced budget is challenged by the ideas of Keynesian Economics Makin and Ornstein 14 120-122 Keynesian economics is an economic model that predicts that in times of low demand and high unemployment a deficit will not cost anything Gordon 132-136 Instead a deficit would allow more people to work increasing productivity A deficit does this because it is invested into the economy by government For example if the government spends deficit money on new highways trucking will benefit and more jobs will be produced When an economic system is in recession all of its resources are not being used For example if the government did not build highways we could not ship goods and there would be less demand for them The
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