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Deficits and The Debt: An example.

Deficits and The Debt: An example. Year Taxes Spending Deficit/Surplus Debt 25M 25M 0 0 27M 30M -3M 3M 30M 35M -5M 8M

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Deficits and The Debt: An example.

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  1. Deficits and The Debt: An example. Year Taxes Spending Deficit/Surplus Debt • 25M 25M 0 0 • 27M 30M -3M 3M • 30M 35M -5M 8M • 33M 32M 1M 7M

  2. Some Numbers for the US • FY2012 • October 1, 2011 through September 30, 2012. • Receipts = $2,469 billion • Outlays = $3,796 billion • Deficit = $1,394 billion • Source: Office of Management and Budget • http://www.whitehouse.gov/omb/

  3. As a percent of GDP • FY2010 • Receipts = 15.8% • Outlays =24.3% • Deficit = 8.5% • Note: GDP = $15,601 billion

  4. US Debt Held by the Public • http://www.treasurydirect.gov/NP/BPDLogin?application=np • $10,821 billion, which is about 69% of GDP. • Biggest holders of US Debt: http://finance.yahoo.com/news/biggest-holders-of-us-gov-t-debt.html

  5. 5 The U.S. government debt The debt of the U.S. federal government, expressed here as a percentage of GDP, has varied throughout history. Wartime spending is typically associated with substantial increases in government debt.

  6. The history of U.S. government debt • Large increase in government debt • Cannot be explained by war • Around 1980 • President Ronald Reagan, 1981 • Committed to smaller government and lower taxes • Cutting government spending - more difficult politically than cutting taxes • Period of large budget deficits • Government debt: 26% of GDP in 1980 to 50% of GDP in 1993

  7. The history of U.S. government debt • President Bill Clinton, 1993 • Major goal - deficit reduction • Tax changes • And Republicans took control of Congress, 1995 • Deficit reduction • Substantially reduced the size of the government budget deficit • Eventually: surplus • By the late 1990s - debt-GDP ratio - declining

  8. The history of U.S. government debt • President George W. Bush • Debt-GDP ratio - started rising again • Budget deficit • Several major tax cuts • 2001 recession - decreased tax revenue and increased government spending • War on terrorism - increases in government spending • Major new social initiative – Medicare prescription drug benefit

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