ipl-logo

Pros And Cons Of Budget Surplus

863 Words4 Pages

A budget surplus occurs when tax revenue is greater than government spending. Therefore, the government can use the surplus revenue to pay off the national debt.
Budget surpluses are quite rare in modern economies because of the temptation for politicians to spend more money and cut taxes.
A budget surplus is appropriate when the economy is in the growth phase of the economic cycle. In a recession, demand is depressed, and it is expected to have a budget deficit. Trying to attain a budget surplus in a recession will involve higher taxes and lower spending – but these policies could make the recession worse. Therefore, it is better to wait until the economy recovers, and automatic fiscal stabilizers improve (higher growth automatically leads to higher income tax revenues) …show more content…

The term "budget surplus" is most commonly used to refer to the financial situations of governments; individuals speak of "savings" rather than a "budget surplus." A surplus is considered a sign that government is being run efficiently. A budget surplus might be used to pay off debt, save for the future, or to make a desired purchase that has been delayed. A city government that had a surplus might use the money to make improvements to a run-down park, for example.

When spending exceeds income, the result is a budget deficit, which must be financed by borrowing money and paying interest on the borrowed funds, much like an individual spending more than he can afford and carrying a balance on a credit card. A balanced budget occurs when spending equals income. The U.S. government has only had a budget surplus in a few years since 1950. The Clinton administration (1993-2001) famously cured a large budget deficit and created a surplus in the late

Show More
Related
1010 Words | 5 Pages

Independence can be expensive. While the American Revolutionary War very costly casualty-wise, it left a young, new nation with millions of dollars of domestic and foreign debt. This staggering debt, at the time, totaled 77.1 million dollars, 1.27 billion in today’s american dollar. Debt was divided throughout the colonies, since there was no umbrella organization, like the government, to pay off the tax as one tax rather than haphazardly dealing out twelve different recompenses. Alexander Hamilton feared this debt and drafted his plan of action to keep the debt at bay and to repay the tax in a simple way--or so it seemed.

Read More
213 Words | 1 Pages

Congress has the best plan for the U.S. Reconstruction. The plan Congress made gives freedmen the right to vote. It recognizes freedmen 's rights as well. Congress’s plan lets the Southerns keep their property but doesn’t reimburse them for all of their lost and damaged property. The plan uses military law and governors.

Read More
246 Words | 1 Pages

A publicly funded debt connects states and individuals closer to the government and gives it a reason to continue functioning for the people. Furthermore, It allows individuals to become budget conscious

Read More
748 Words | 3 Pages

Governors and legislatures intentionally circumvent balanced budget requirements endangering fiscal sustainability and evading public scrutiny. At least a quarter of a state's revenue comes from federal grants

Read More
776 Words | 4 Pages

They are planning on spending 3.9 trillion dollars in tax money. Speaking of that, congress controls taxes and tariffs to fund for government services, and If enough money can’t be raised to fund the government, then Congress can borrow to make up the difference. Congress can mandate spending on specific items like legislatively directed spending. The legislative branch has the power to spend, borrow, create, and tax money. The legislative branch can literally stop making money or make trillions of

Read More
763 Words | 4 Pages

In the Great Depression of 1932, the stock market crashed which caused a lot of Americans to try to sell their stock before the price got too low. For many of the Americans, they lost all their money and became very poor. Many banks shut down due to the lack of money they each contained. In order to fix this, a plan called, “The New Deal” that was created by FDR. The New Deal consisted of many new programs to promote money to the economy so it would be back in the same cycle it was before the Great Depression.

Read More
521 Words | 3 Pages

In the late 1800s, the U.S Treasury Department used sales tax and tariffs to fund its federal budget. A tax or tariffs are funds that are paid to the government that are added when something is bought that is considered valuable. Because of the Civil war, there was a financial burden on the country. In 1861, Congress reacted by implementing taxes on individuals. The first income tax started off by taxing individuals 3% making more than $800, while people who made more than that gave up a larger percentage.

Read More
242 Words | 1 Pages

In the article “Stronger Economy Cited as U.S. Reports Lowest Budget Deficit of Obama’s Tenure” by Julie Hirschfeld Davis she explains how obama’s administration announced that the Federal Budget Deficit fell to the lowest point ever since obama took over office. Although the deficit being at its lowest point is bad news they also said that the economy is strengthening which is good news. The Treasury Department and the Office of Management and Budget reported that In 2015 the FBD was $439 billion that is $44 billion less than last year. “Under the president’s leadership, the deficit has been cut by roughly three­quarters as a share of the economy since 2009 the fastest sustained deficit reduction since just after World War II,” Treasury Secretary

Read More
1012 Words | 5 Pages

This means the US has been maintaining its spending a full 1% of its gross domestic product (GDP) just to maintain its arsenal. However, military spending has become a hot topic during debates in many years now, where some people suggest of cutting it, while others are okay with increasing it. To come up with a good decision on our end for this matter, let us take a look at its pros and cons. List of Pros of Military Spending Supporters of military spending see many advantages coming from it.

Read More
843 Words | 4 Pages

The money that’s being taxed from a person can no longer be used to consume a product or service. Debt or borrowing allows you to consume in the present, but it restricts your ability to consume in the future. Furthermore, John Bydlak informs us within the article that higher government leads to higher inflation, higher interest rates, and inevitably higher prices. Thus, American citizens are being further restricted in their ability to consume as it is more expensive to do so. Federal debt can only be described as a deal with the

Read More
1688 Words | 7 Pages

Military spending is also know as a defense budget, the amount of financial resources dedicated by a nation to raise and maintain a country. Since WWII there has been lots of fluctuation of how much the military spends. As we go from president to president we can see constant changes in how much our country spends on the military. In the year 2000 the gross budget of spending was cut to its lowest since 1939. Since then the military has been weaker than it

Read More
2416 Words | 10 Pages

If enough money cannot be raised to fund the government, then Congress may also authorize borrowing to make up the difference. Congress can also mandate spending on specific items: legislatively directed spending, commonly known as "earmarks," specifies funds for a particular project, rather than for a government

Read More
813 Words | 4 Pages

Solution : Introduction: A budget is an estimation of particular commodity, quantity etc. It can be prepared for any number of days but generally it is prepared wither for a year or quarter... A budget may or may not become the actual outcome.

Read More
757 Words | 4 Pages

The national debt is growing by the second. The United States is 20 trillion dollars in debt. The largest portion of the debt is money that the government owes itself, borrowed from Medicare and social security. Debt is different from the deficit, deficit when the government plans to spend more than they have yearly counted. Debt is the accumulation of deficit.

Read More
1195 Words | 5 Pages

1) Government may intervene in a market in order to try and restore economic efficiency. One of the ways the government intervention can help overcome market failure is through the introduction of a price floors and price ceilings. If prices are seen to be too high, price ceiling or a maximum price could be imposed on a market in order to moderate the price of the product. This policy is often used when there are concerns that consumers cannot afford an essential product, such as groceries. The effect of a maximum price could create a shortage as it could lead to demand exceeding supply for that particular good.

Read More

More about Pros And Cons Of Budget Surplus

Related Topics

Open Document