Chapter13 - deficit over time. It was unsuccessful. Another...

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Federal Deficits, Surpluses, and the National Debt CHAPTER SUMMARY The federal budget process consists of four stages---agency budget proposals, presidential budget submission, and the first and second budget resolutions. One needs to be reminded that fiscal policy is undertaken in a political environment. Fiscal deficits are not new to the American experience. However, they have increased considerably since 1980. Fiscal deficits are financed by the federal government issuing new U.S. Treasury bills, notes, and bonds. Because these government securities are debt issues of the U.S. government, deficits add to the national debt. The Gramm-Rudman-Hollings bill was an attempt to force government to reduce the
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Unformatted text preview: deficit over time. It was unsuccessful. Another proposal has been the line-item veto. Still another has been a constitutional amendment requiring a balanced budget. The concern over the deficit and therefore the debt stems from the problems which they may create. The extent of the problems which may be created is still being debated. Some of the "problems" addressed in this chapter include: 1) Can the U.S. government go broke? 2) Are we passing the debt burden to our children? 3) Does government borrowing crowd out private-sector spending. The reasons to worry and not to worry are discussed....
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