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Budget - Budget Politics History Ran deficits for 40 of...

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Budget Politics History Ran deficits for 40 of last 45 years Including every fiscal year running from 1969 through the end of 1997 Ran surpluses for 4 years from 98-01 Largest deficit in $ amount was in 2004 (412 Billion); largest deficit as percentage of GDP was in 1983 (6.0%; 3.6% in 2004) Definitions Deficit – amount by which government spending exceeds government revenues in a single year National Debt – total amount of money the federal government owes to pay for accumulated deficits Budget Surplus – revenues exceed spending Why chronic deficits? Change in political attitudes Increase in the number of social programs 1980s – lower taxes with no similar cut in spending blame – on the public – demand services but prefer lower taxes Why the surplus? Budget agreements by President Bush and Democratic Congress Clinton & Republican Congress – taxes increase, reduced spending Good economy – low unemployment with low inflation Peace dividends Is debt bad? Good debt v. bad debt Most of the money is owed to ourselves Could place some limitations on governmental options The Future Outlook Demographic tensions loom in the not-so-distant future. After 2010, the
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