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A deficit is a difference between the government's expenditures and receipts in a given year. Normally, the budget is taken up by the federal debt/national debt. This is the sum of all previous deficits minus the amount repaid by the government (Barth & Li, 2012). The state of the economy and tax laws enacted by Congress dictate expenditures and revenues.
Tax spending rises through difficult economic times, such when the Great Recession, as the government wants to assist the public. Because of the economic crisis, tax collections are decreasing at the same time. The lawmakers in turn increase spending in an attempt to stimulate the economy regardless of the fact that it would lead to a deficit that places the government on an ethical dilemma. While the deficit has especially grown in recent times since the period of the great recession by around 9.8% of the economy, it has since reduced to about 3.2% of the economy in 2015, as the economy had stabilized (Matthews & Driver, 2016). The year 1943 has the record of the government having the highest deficit of about 30% of the US economy as most of the money was used in the World War II (Humpage, 2016). On the other hand, budget surpluses experienced in the 1990s were due to tax increases (Martinez, 2015). The trend in the US federal debt is presented below:
U.S. Department of the Treasury (2017)
I was faced with a dilemma in an open book exam that I wasn’t confident of how prepared I was. However, in class, other people were openly copying from each other. My integrity was at stake despite the fact that I was prone to fail in the exam. I decided to write the little I knew and went on to be among the least performers in the same paper. I wouldn’t let my conscience down and hence I would make the same choice today.
Barth, J. R., & Li, T. (2012). Us Debt and Deficits: Time to Reverse the Trend Us Debt and Deficits: Time to Reverse the Trend. Economic Affairs, 32(3), 97-101. doi:10.1111/j.1468-0270.2012.02181.x
Humpage, O. F. (2016). Fiscal Dominance and US Monetary: 1940-1975. Working Paper Series (Federal Reserve Bank Of Cleveland), 16(31-33), 1-32.
Martinez, A. B. (2015). How good are US government forecasts of the federal debt?. International Journal Of Forecasting, 31312-324. doi:10.1016/j.ijforecast.2014.08.014
Matthews, W., & Driver, R. (2016). Restructuring the US Economy to Prevent a Debt Crisis. Business & Management Review (Conference Proceedings), 7(5), 1.
U.S. Department of the Treasury (2017). Fiscal Service, Federal Debt: Total Public Debt [GFDEBTN], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/GFDEBTN, February 3, 2017.
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