Why is the federal budget deficit so high?
The US currently operates under modern ‘Keynsian’ economics. Google John Maynard Keynes for more information. In short, we borrow or (in theory) save money to accelerate or decelerate economic activity. The deficit is so high because the government spends much more money on defense, entitlements, and operations than it takes in through from taxes, tariffs, and investment income. This overspending is financed by selling government bonds to anyone who will buy them, including individuals, institutions, and foreign governments, and in some cases by printing money at the Fed. Under Keynsian economics, the government saves during the good times, and engages in deficit spending during the bad times to help deal with recessions in the business cycle. Deficit spending during bad times is ok, and helps to deal with unforeseen problems, such as the bank failures that occurred during the depression. So deficit spending per se is not the problem. The problem is that our politicians lack the restra
