Advantages And Disadvantages Of Deficit Spending

Introduction: What is deficit spending and how does it work To write about deficit spending you must under what is the meaning of deficit spending. A government that spends more over fiscal period, thus creating or enlarging a nation debt balance (Investopedia). Many may say that this is a tool to simulative the economy, however most see it as irresponsible spending by the government. However, many government use deficit spending to pick up the national economy from a recession. To simply put it deficit spending is almost like the government writing a check in account that has no funds to back it.
Advantages
The advantages associated with deficit spending is even though the government may not have the monetary funds at the time, by deficit …show more content…
Too large of a debt may force the government to raise funds to cover the debt. This can be through taxes or the withdrawing funds from other government operated programs. Those programs that funds are normally cut by the government is the military, health care, education, and transportation infrastructure. Long-term sustainability. The nation has projected long-term deficits—that is, deficits that will mount if today’s policies do not change—are not sustainable and threaten our economic viability (Couch). The only way to decrease spending is spend. I know it sound crazy but due to the current financial policy in place and the borrowing that has already took place there is no other successful way to increase employment. The only way deficit spending could not be disadvantages is if the government could generate revenue to close the gap. By generated the funds borrow could be repay and a possible surplus could be established. Taxes should be increase before recession take place to prevent the need for nation to eliminate the use of deficit spending as a first option. Finally, worst-case scenario if the government cannot pay for the debt incurred, they may default on the debt …show more content…
The crowding out effect can drive down spending or even eliminating private sector spending (Investopedia). This can drive up consumer interest and have an overall dramatic effect on not only the economy but infrastructure projects as well. Without Private Corporation, the economy and infrastructure of a country could possibly fail. That is not an option with an economy the size of the United States a world superpower, with many other nation depending on our nation for economic help and