I appreciate all of your questions and I’ll be more than happy to answer your question; however, there are better forums than FOG HORN to get that information. I did open the door by opening the topic, but I’d like to close it with this response.
Thank you for understanding and thank your for visiting FOG HORN.
A budget deficit occurs when the U.S. government spends more than it takes in. The government has a number of revenue streams. It follows, that when the government spends less than it takes in, we experience a surplus.
When the government is running on a deficit, the amount by which spending exceeds income has to be financed. The government goes to the private sector and raises the funds it needs by borrowing. When the government borrows it incurs a liability. In other words, it is on the hook for the amount borrow as well as interest payments on the borrowed funds.
Interest payments are part of the fiscal budget; therefore, as national debt increases our interest payment obligation increase. Eventually, these interest payments become a larger part of our annual budget; preventing us from funding programs needed to maintain our defense posture, entitlements and all those things that benefit our country and its citizen. If unchecked, debt can increase to the point where interest payments and maturing obligations can consume the majority of government’s income. Greece, Spain, Portugal are struggling with these problems as I write this.
When a government realizes as surplus, as in the Clinton Presidency, it does not follow that the national debt will reduce correspondingly. In President Clinton’s case, national debt grew 1.02 trillion dollars 1993-1997 and 0.4 trillion dollars 1997-2001. So, take the deficit v. surplus discussions with a grain of salt until legislation is passed that requires all surpluses be applied to retire national debt. When that happens you can take it seriously.
Surpluses come when the economy is growing, which gives government a larger revenue base. You don’t want to tax your way to a surplus because you are reducing disposable income which shrinks the economy further. There are a number of other issues such as balance of payments etc. that need to be considered and are advanced topics.
The key to surpluses is an expanding GDP (this gives you near full employment) with a reduced balance of payments.
I hope this helps you.
FOG HORN 