Federal Deficit

Examples of Federal Deficit in the following topics:

• Debt and the Stock Market Plunge

  • The United States became the world's largest debtor, borrowing domestically and internationally to finance the federal deficit.
  • During the Reagan Administration, federal receipts grew at an average rate of 8.2% (2.5% attributed to higher Social Security receipts), and federal outlays grew at an annual rate of 7.1%.
  • The policies were labeled by some as "Trickle-down economics," because the combination of significant tax cuts and a massive increase in Cold War-related defense spending caused large budget deficits, the U.S. trade deficit expansion, and the stock market crash of 1987, all of which contributed to the Savings and Loan crisis.
  • John Kenneth Galbraith called the Saving and Loans crisis "the largest and costliest venture in public misfeasance, malfeasance and larceny of all time. " In order to compensate for these new federal budget deficits, the United States borrowed heavily, both domestically and abroad, raising the national debt from $997 billion to $2.85 trillion.
  • Such programs included Social Security, Medicaid, Food Stamps, and federal education programs.

• Gridlock in Government

  • Early in his term, Bush faced the problem of what to do with leftover deficits spawned by the Reagan years.
  • Reagan’s policies of cutting taxes and increasing defense spending in relation to the Cold War had exploded the federal budget deficit, making it three times larger in 1989 than when Reagan took office in 1980.
  • The deficit had reached a high of $220 billion in 1990.
  • Bush was dedicated to curbing the deficit, believing that America could not continue to be a leader in the world without doing so.
  • Angered Republican congressmen defeated Bush's proposal which would enact spending cuts and tax increases that would reduce the deficit by $500 billion over five years.

• Federal Grants and National Efforts to Influence the States

  • In the United States, federal grants are economic aid issued by the federal government out of the general federal revenue.
  • A federal grant is an award of financial assistance from a federal agency to a recipient to carry out a public purpose of support or stimulation authorized by a law of the United States.
  • For instance, PBS, the network on which Big Bird features, relies heavily upon federal grants.
  • Federal grants are defined and governed by the Federal Grant and Cooperative Agreement Act of 1977.
  • Republican candidate, Mitt Romney, claimed that he would cut federal grants to organizations like PBS to reduce the federal budget deficit.

• The Election Year Budget

  • Since 1970, the U.S. federal government has run deficits for all but four years (1998–2001) contributing to a total debt of $16.1 trillion as of September 2012
  • Congressional decisions are governed by rules and legislation regarding the federal budget process.
  • Since 1970, the U.S. federal government has run deficits for all but four years (1998–2001) contributing to a total debt of $16.1 trillion as of September 2012 .
  • The 1996 United States federal budget was the United States federal budget to fund government operations for the fiscal year 1996, which was October 1995 – September 1996.
  • Republicans have criticized the president's plan for not going far enough to reduce future deficits.

• Bernanke Era

  • The Bernanke Era has included challenges faced by the Federal Reserve such as the financial crisis, strengthening federal policy, and reducing the deficit.
  • In 2010, Bernanke also expressed his views regarding deficit reduction and reforming Social Security/Medicare.
  • He favored reducing the U.S. budget deficit.
  • He stated that reforming Social Security and Medicare entitlement programs would help reduce the deficit.
  • He emphasized that deficit reduction would need to consist of raising taxes, cutting entitlement payments, and reducing government spending.

• Arguments for and Against Balancing the Budget

  • Balanced budgets, and the associated topic of budget deficits, are a contentious point within both academic economics and politics.
  • There is neither a budget deficit nor a budget surplus; in other words, "the accounts balance. " More generally, it refers to a budget with no deficit, but possibly with a surplus.
  • In the US, every state other than Vermont has a version of a balanced budget amendment, which prohibits some deficits.
  • The federal government does not have such an amendment.
  • During recessions governments should run deficits.

• The U.S. Trade Deficit

  • At the end of the 20th century, a growing trade deficit contributed to American ambivalence about trade liberalization.
  • The answer can be found in the U.S. recovery from the global recession of 1981-1982 and in huge U.S. federal budget deficits, which acted together to create a significant demand in the United States for foreign capital.
  • By 1987, the American trade deficit had swelled to $153,300 million.
  • But the American trade deficit swelled again in the late 1990s.
  • By 1997, the American trade deficit $110,000 million, and it was heading higher.

• Does U.S. Treasury Affect the Monetary Base?

  • The U.S. federal government has experienced persistent budget deficits for the last 40 years because the U.S. government spends more than what it collects in taxes.
  • Government finances budget deficits in three ways.
  • Could the U.S. federal government affect the monetary base by financing budget deficits?
  • The Federal Reserve is not required to buy U.S. government securities or help the U.S.
  • Treasury finance budget deficits.

• Deficit Spending, the Public Debt, and Policy Making

  • Deficit spending and public debt are controversial issues within economic policy debates.
  • Deficit spending occurs when government spending exceeds tax receipts.
  • Governments usually issue bonds to match their deficits.
  • The United States public debt is the outstanding amount owed by the federal government of the United States from the issue of securities by the Treasury and other federal government agencies.
  • Debt held by the public includes Treasury securities held by investors outside the federal government, including that held by individuals, corporations, the Federal Reserve System and foreign, state and local governments.

• Is the Federal Reserve Independent of the U.S. Government?

  • However, a government budget deficit could lead to money creation.
  • If the Fed maintains a constant interest rate, and the U.S. government operates a budget deficit, the U.S.
  • Treasury department can finance the deficit by issuing T-bills.
  • Many Americans and experts believe the massive $17 trillion U.S. government debt will lead to inflation as the U.S. government forces the Federal Reserve to buy its bonds.
  • Subsequently, the Federal Reserve would lose its independence.