The U.S budget deficit over the years has been a problem but lately the deficit has shrunk. However, what made the U.S budget deficit get to where it is today and what will it be like in the years to come. Throughout the past the U.S has operated under a deficit. This means that the U.S Spent more money than it was taking in. The cause of the excess in spending was different depending on which year. Some of the causes were war, increase in spending , and economic downturns. There were different acts passed to try and control the deficit problem. The deficit at the present time is declining. This decline is due to the improving economy, sequester, and a tax increase on high-income households. The big factor that went into the decline in the deficit for 2013 was the payment that Fannie Mae and Freddie Mac made. The deficit decline in the present time may make some think the U.S could get out of debt but it has been projected that the U.S deficit will start to increase once again.
Keywords: Budget Deficit, GDP, Budget Surpluses, Federal Debt, Economic Downturns, Tax Cuts
Throughout the years the U.S has had more budget deficits than it has had surpluses. This is due to the excess in spending and not enough revenues to pay for it. Many have debated over the U.S budget deficit problem. However to fix the problem one has to research the past to figure out how the U.S budget deficit got to where it is now. Hopefully by figuring out this, one could project what the U.S budget deficit will look like in years to come.
During the 1940's which would be the World War II and great depression era, there was an increase in debt. This was because of all the funding that went towards the war and New Deal policies. In 1943, the GDP reached the highest point in history at a 28.1%. After the war ended the deficit dropped and remained fairly constant through 1981. This was due to responsible financing and having enough revenues to pay for government services. The U.S government’s debt fluctuated from $22 billion to $221 billion during 1971 through 1997 but did not make more than 6% of GDP. After fluctuating for a few years the federal government ran in surpluses. If the surpluses would have stayed constant until 2006, then it was estimated that the redeemable federal debt would have been paid off by the U.S government.(Utah) However, the U.S has had a deficit each year since 2001 due to the changes in spending taxation. The deficit was so high in 2009 that it was more than 10% of GDP, which has not been that high since World War II. There is many different factors that go into the cause of deficits, such as economic downturn, tax cuts, and an increase in spending. However, there are different acts that have been passed to help with the increased budget deficits. One act was the deficit reduction act that President Clinton signed in 1993. Since the late 1990's had a strong economy the act was able to generate high revenues. There was a...