Unformatted text preview: The third position, a bit on the fringe, claims that the budget deficit is not a reasonable measure of fiscal policy. While these economists do believe that the government can affect spending, savings, and investment, they also believe that the budget deficit is simply an incomplete measure of these variables. Based on this position, the budget deficit should not be a focal issue in the economic policy debate. Which of these views is most reasonable? There is likely a bit of truth in all of them. The best view of the budget deficit comes from understanding the major positions on the issue and creating some sort of compromise between the traditional, Ricardian, and fringe viewpoints. Each time a budget deficit is run, money is added to the national debt. Similarly, each time a budget surplus is run, money can be, but is not necessarily, taken away from the...
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- Fall '10
- Deficit, national debt, budget deficit