Budget deficit Essay

Submitted By Saraabaatar
Words: 1156
Pages: 5

Introduction
Many scholars and economists consider the occurrence of a rising budget deficit as a result of a weaker economy and an interruption of a government spending on priority areas such as health, education, transport and defense.
Kohut (2012) stated that the budget deficit stands out as one of the fastest growing priorities for Americans, rising 16 percentage points since 2007 and ranking third with 69 percentages. However, the findings of the most recent survey that is conducted by the Pew Research Center confirm that the budget deficit has slipped as a policy priority among the public in 2014 and ranking sixth with 63 percentages (Pew Research Center, 2014). The same survey finds that U.S. public continues to give its policy priorities to the issues of economy, job, terrorism, education and social security.
In this essay, I will address the question: Why public opinion on federal budget deficit has or has not changed in recent years, and how that affects policy?
What is Budget Deficit and why does it matter?
The level of government budget deficit is an important part of fiscal policy in any economy. If the government is experiencing a vast budget deficit, it has to borrow through the government debt issues such as long-term government bonds and saving certificates (Riley, 2004, p.113). Many Keynesian economists argue that the budget deficit is advantageous for the economic growth. But the popular opinion of public on federal budget deficit involves number of reasons why budget deficit has impacts in economic growth and living standards of citizens. If the budget deficit remains at a high level, the federal government may need to call buyers of government debt by proposing higher interest rates. Higher interest rates in the long run may mean that taxes will have to rise in the future and this would result a squeeze on spending by private sector businesses and most importantly millions of households. Also, high level budget deficit means that the Government has to spend more each year in debt-interest payments to holders of government bonds and other debt securities. These interest payments might be used in more valuable ways to citizens such as increase in spending on health and other social services (Riley, 2004, p.113).
Federal government spending and budget deficit
Growing federal government spending and shrinking revenues require the government to borrow massive each year to make up the difference. According to the 2010 report of the National Commission on Fiscal Responsibility and Reform, the United States is facing overwhelming budget deficits. The federal budget deficit increased to a record $1.4 trillion for the 2009 fiscal year. Since 1970, the United States Federal Government has been experiencing budget deficits for all, except the years between 1998 and 2001. According to the U.S. Department of the Treasury, the total debt of Federal Government has reached to more than $17 trillion, as of February 2014.
In 2010, the Congressional Budget Office estimated if the current progress continues, deficits would remain high throughout the next 10 years, and debt will extend ever higher, reaching 90 percent of GDP in 2020 (National Commission on Fiscal Responsibility and Reform, 2010).
Yet, in 2013, federal budget deficit dropped to $642 billion. Boccia, Fraser & Goff (2013) beleive that deficits fell in 2013 because President Obama and Congress raised taxes on all Americans, the economy saw slight improvement which helped to bring in more revenue and spending cuts from sequestration and spending caps under the Budget Control Act that took effect in 2011. The Budget Control Act put tight caps on discretionary spending for ten years starting 2013 (Coy, 2013).
Public Opinion on budget deficit

Most of the social scientists who study public opinion and public policy agree that public opinion influences public policy in democratic countries and the more salient an issue to the public, the stronger that…