Budget Deficit Balanced budget debate The budget deficit is often in the media spotlight. The budget deficit is defined as the difference between what the government spends and what the government collects. Government spending takes the form of salaries, defense spending, aid programs, and other cash outflows. Government collection predominately take the form of taxes. When the government spends more than it collects, a budget deficit exists. When the government collects more than it spends, a budget surplus exists. There are three basic sides to the balanced budget debate. The traditionalists argue for a reduction of the budget deficit on the grounds that it harms the economy. Another group holds the Ricardian view of government debt in believing that there is no real harm done to the economy by the national debt. A third group exists on the fringe with the opinion that the budget deficit is not an adequate measure of fiscal policy.
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This note was uploaded on 02/09/2012 for the course ECO ECO2013 taught by Professor Jominy during the Fall '08 term at Broward College.