FACTOID #151: The five countries with the highest coffee consumption are also the five countries whose citizens trust one another the most. Coincidence? Probably.
Note that the deficit is distinct from the government's debt (often confusingly called the national debt or public debt), which results from an accumulated deficit across a number of years. Often, a certain part of spending is dedicated to paying of debt with certain maturity, which can be refinanced by issuing new bonds. That is, a fiscal deficit leads to an increase in an entity's debt to others.
Historically, the United States government has tended to spend more than it takes in, with national debt that was close to $1,000,000,000 at the beginning of the 20th century. The budget for most of the 20th century followed a pattern of deficits during wartime and economic crises, and surpluses during periods of peacetime economic expansion. This pattern broke from fiscal years1970 to 1997; although the country was nominally at peace during most of this time, the federal budget deficit accelerated, topping out (in absolute terms) at $290 billion for 1992. In 1998 - 2001, however, gross revenues exceeded expenditures. Subsequently the budget has returned to a deficit basis; the estimated U.S. deficit for fiscal year 2004 is $412.6 billion.
An issue about counting so-called "off-budget" items such as Social Security, which are presently running a large surplus, complicates discussion of budget deficits.
The size of a governmental budget deficit is often an important political issue as well as one of economic policy.
A structural deficit is the deficit that remains across the business cycle, because general tax levels are too low for the general level of government spending.
The observed total budget deficit is equal to the sum of the structural deficit with the cyclical deficit or surplus.
Deficit spending is the amount by which a government, private company, or individual's spending exceeds income over a particular period of time, also called simply "deficit," or "budget deficit," the opposite of budget surplus.
But government deficits are not the only cause of inflation: it can arise due to such supply-side shocks as the "oil crises" of the 1970s and inflation left over from the past (inflationary expectations and the price/wage spiral).
If the government borrows (runs a deficit) to deal with a severe recession (or depression), to help self-defense, or is spent on public investment (in infrastructure, education, basic research, or public health), the vast majority of economists would agree that the deficit is bearable, beneficial, and even necessary.
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