deficit spending


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Deficit spending

When government spending overwhelms government revenue resulting in government borrowing.

Deficit Spending

A situation in which a company, or especially a government, spends more money than it collects for a given period of time, usually a quarter or a year. Companies and government finance deficit spending with borrowing; for example, the U.S. government could issue Treasury securities. Some economic theories, notably Reaganomics and Keynesian economics, minimize the importance of government deficit spending, especially during recessions. However, deficit spending adds debt, which can be detrimental in the long term. See also: national debt.

deficit spending

Expenditures that are in excess of revenues during a given period of time. Deficit spending is generally applied to governmental units, but the concept is equally applicable to private businesses.
References in periodicals archive ?
The authors identify a fiscal sea change beginning in the early 1970s; prior to that decade, budget balance over the course of a cycle was the peacetime norm, but since then the fiscal norm has been chronic deficit spending and debt buildups, even amid peacetime.
Thus even Stephen Harper--whose master's thesis was an attack on countercyclical fiscal policy on the grounds that it will inevitably be driven more by politics than by economic need--undertook some fiscal stimulus via increased deficit spending. But central banks were not as constrained as people thought.
The European Commission, headquartered here in Brussels, eagerly seized upon supposed evidence for"expansionary austerity," rejecting the conventional case for deficit spending in favour of the claim that slashing spending in a depressed economy actually creates jobs, because it boosts confidence.
Each time the Federal Reserve and federal government step on the gas of the economic bus through interest rate cuts and deficit spending, the gas leaks out of the line.
History demonstrates that absent permanent structural change to how Congress conducts business, there will be an immediate snap-back to deficit spending and entitlement expansion.
US leaders failed to reach agreement before Christmas amid a split over Democrat demands to cut deficit spending by raising taxes for wealthy earners and Republican plans to slash popular benefit programmes.
According to the Daily Mail, the group said that at more than nine percent, the 1.56 trillion dollar federal deficit last year was the culmination of three years of major deficit spending in the wake of the recession.
He discusses sovereign default probabilities and domestic and international risk transfers; political economy problems that arise in multi-level governments; rules to reduce deficit spending on the sub-national government level; the decision to provide financial bailout and its effect on the amount of deficit spending; the market for rating agencies and their business model; and the impact of fiscal policy variations on asset prices, using the example of Germany.
Although many conservatives still have faith in fiscal stimulus based on tax cuts, libertarians and Tea Partiers have condemned the very notion of stimulus spending, whether delivered through tax cuts or federal handouts, believing that government deficit spending must always make things worse.
EU members have agreed to embrace a "fiscal compact" binding them to specific limits on deficit spending, with automatic consequences to follow for those who miss their targets.
Fourthly from the government's deficit spending. Other than these four mechanisms a small portion of consumer income is derived from the stock market in periods of booms.
From the 1790s to the 1920s budgets were balanced except for recessions and wars, and the political elite was of one mind in subscribing to the normative injunction to avoid deficit spending. From the 1930s to the early 1970s, deficits were "regularly utilized as an instrument of economic management." The transition to the third era marks a more radical change, a critical juncture: "Since the late 1970s...