The U.S Budget Deficit Essay

1516 Words 7 Pages
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 …show more content…
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 thirty-five percent increase tax rate for corporations and top earners had a thirty-nine percent increase in the income tax rate. The high revenues only lasted until 2010, when the revenues fell to almost fifteen percent of GDP. There is many different factors that contribute to the decline in revenue. One factor is all the tax cuts due to different acts

Related Documents