We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Nobody downloaded yet

Federal Budget Deficit - Essay Example

Comments (0) Cite this document
Name Tutor Course Date “Federal budget deficit” A budget deficit refers to the amount by which a company, individual or a government’s spending exceeds its income over a given period. It can be called a deficit or a deficit spending. Most governments across the world experience deficit budgets because of several reasons…
Download paper
Federal Budget Deficit
Read TextPreview

Extract of sample
Federal Budget Deficit

This paper intends to discuss the significance, causes and recommendations attributed to the federal budget deficit. The federal budget deficit is significant in a number of ways. This may be either short term or long term. For instance, in a slack economy, the major effect of an increase in the deficit is stimulation of demand and consequent raise of output (The Moment of Truth, 22). It is significant to note that, as the economy approaches full employment and tightening of the credit markets, the federal government borrowing tends to push up the interest rates. In the same regard, higher interest rates influence the cost of financing new investment in plant and equipment. More over, the federal deficit causes higher interest rates influence international capital flows and consequent effect on trade balance. In addition, the deficit causes increase in the exchange value of the dollar particularly the price of the imported products falls. The deficit also increase the size of the national debt consequently increase of the size of the annual interest payments make on the debt. On the other and, it should be noted that not all times the deficits pose disadvantages to the populace. Running temporary deficits especially during a recession economy a federal government can enhance a weak economy and cushion the effects of the downturn on Americans. Some of the causes of the budget deficit include tax cuts. According to the experts, the tax cuts pay for themselves. This implies that, the economy expands rapidly because of the tax cuts, which produce almost the same level of revenue, as it would have in the absence of tax cuts. This study observes that if the costs of extending the management of the tax cuts are not compensated by expenditure reductions, extending the tax cuts would somewhat decrease long-run economic expansion (The Moment of Truth, 24). On the same regard, increased domestic spending in various sectors of economy such as education, Medicare, defense (homeland security) and infrastructure is immensely attributed to the current budget deficit. For instance between 2001 and 2006, the federal budget on domestic spending account for almost 26%. It is imperative to note that, even if the overheads of extending the tax cuts are compensated by expenditure cuts, the tax cuts would at preeminent have only small positive consequences on the economy. More over, today’s deficit is observed to have been caused by the 2001 economic downturn. The budget deficits can be reduced by cutting down expenditure on domestic spending. For instance, reduced spending on domestic programs through 2011 saw a total of $75 billion saved. In addition, tax cuts should be regulated to a lower level and more significant, strategies on reduced tax cut administration costs should structured to ensure reduced expenditure during this exercise (The Moment of Truth, 22). This study finds out that the federal government borrowing tends to push up the interest rates, which are settled by the deficits. It is imperative to note that, deficits of such kind can be reduced by reducing government borrowing intended for the recurrent expenditure. However, this might not serve as a permanent solution in a slowly recovering economy attributed with the country’s medium and long term fiscal challenges. It is significant to note that, this is a tight economic situation, which requires stringent ... Read More
Cite this document
  • APA
  • MLA
(“Federal Budget Deficit Essay Example | Topics and Well Written Essays - 1250 words”, n.d.)
Retrieved from https://studentshare.net/finance-accounting/86199-federal-budget-deficit
(Federal Budget Deficit Essay Example | Topics and Well Written Essays - 1250 Words)
“Federal Budget Deficit Essay Example | Topics and Well Written Essays - 1250 Words”, n.d. https://studentshare.net/finance-accounting/86199-federal-budget-deficit.
  • Cited: 0 times
Comments (0)
Click to create a comment
Features Of Australian Federal Budget 2011
By recruiting and training people for more rewarding jobs, this budget plans to increase the national economic prosperity. The budget also aspires to take advantage of the seismic shift in the global economic power, which greatly benefits the nation as this unexpected shift influences the economic growth in the country’s Asian region.
6 Pages(1500 words)Essay
Essay on budget deficit
Organisation for Economic Co-operation and Development (OECD) has predicted that government debt will increase seriously by unmaintainable levels in advanced as well as emerging economies within next 25 years.
5 Pages(1250 words)Essay
The current macroeconomic situation
Stated otherwise, at this moment, US economy as a whole is strong. Tilton (2011) cited two main factors as the basis of this prediction. The first reason is the stronger private sector balance sheets in America. To note, before the financial crisis, America’s private sector was spending beyond what it can only spend (Tilton, 2011).
2 Pages(500 words)Essay
Term Paper on Budget Deficit
The 2008 global financial crisis and subsequent recession caused many countries to close their fiscal period with a budget deficit, and its effects are ongoing. There are two different concepts associated with government budget deficit including primary deficit and total deficit.
8 Pages(2000 words)Term Paper
Implementation and Analysis of The Fiscal Cliff contained in the U.S. Budget Control Act of 2011
There are two components in the Budget Control Act 2011that are designed to initiate “a sequestration of discretionary and/or mandatory (or direct) spending” (Saturno & Heniff, 2009, p. 17-5). Tax Component of the Act – allowing Bush tax cuts to expire George W.
4 Pages(1000 words)Essay
Efforts to Reduce the Budget Deficit
Though with deep roots in history, upping the tempo in the early 1970s due to the non-proportional increases in government spending relative to the increases in tax revenues, the recent surges in the debt burden are, however, the result of extreme measures taken to mitigate the effects of the deep and prolonged recession that kept the nation on its toes with a non-convincing recovery pace.
3 Pages(750 words)Essay
The federal budget deficit
‘The public debt, which is sometimes called the federal or the national debt, is the total amount the federal government owes its creditors.’ (Arnold, 2008) The reduction strategy for budget deficit involves decreasing the public expenditure or increasing taxes or a combination of both.
4 Pages(1000 words)Research Paper
As the Federal government comes to terms with large budget deficits, what will be the effect on the American economy
Yet, a growing economy requires an ever-increasing amount of money, and without it the economy would grow stagnant and refuse to grow. Government spending, and government debt, does have the capacity to fuel the economy, but there are also other
3 Pages(750 words)Essay
Current Administrations Budget
Obama would use $316 billion in savings from those entitlement programs and forecasts other savings by decreasing the rate by which wealthier people can cut their taxes through certain deductions. Charging upper-income
6 Pages(1500 words)Essay
The policy first appeared in the year 1985 in the Gramm-Rudman-Hollings Deficit Reduction Act of the same year. It should be noted that the implementation of Sequestration would lead to cutting of the federal spending across the board (Genovese, 2010). Jack
1 Pages(250 words)Essay
Let us find you another Essay on topic Federal Budget Deficit for FREE!
Contact us:
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us