What is Deficit Spending?

What is Deficit Spending?



Importance of Deficit Spending

A deficit spending is when the spending money is more than the income; therefore it is supported by money raised from borrowing.  According to GPO Access (n.d.), the United States 2010 budget is projected to have a significant increase in debt.  However, the spending is justified by the mandatory and discretionary spending that is needed to run the country smoothly.

The mandatory spending includes important programs such as Social Security, Medicare, Medicaid, potential disaster costs, and Total Asset Relief Program (TARP) (WhiteHouse.gov, n.d.).  Social Security cuts are taken out when citizens are working and are promised to receive them back as benefits once they retire and don’t have the income.  Similarly, Medicare is a health insurance for seniors that they paid for too.  Medicaid is a health insurance assistance program for those who don’t have any insurance coverage; most people who are low income and don’t have insurance are eligible for it.  Both the Medicare and Medicaid are necessary for people to get access to the health care.  Potential disaster costs and TARP are also included in the mandated spending budget as any type of natural or human-caused disaster could hit the nation, and the fund needs to be there for immediate access to provide relief effort on time.

Discretionary spending is also necessary to run the nation, and accounts for one-third of the spending budget.  It is not specifically described but the money is allocated for different government departments to decide own their own.  These government departments include defense, health and human service, transportation, veteran affairs, education, homeland security, energy, agriculture, justice, commerce, labor, treasury and many more (WhiteHouse.gov).  All of them play important role on its own with the support of discretionary spending budget granted the by the government.

In conclusion, deficit spending is important when government doesn’t have any option.  Both the mandatory as well as the discretionary spending cannot be downplayed.  They have critical elements that are necessary to run the country smoothly and keep people healthy.

References

GPO Access. (n.d.). A New Era of Responsibility Renewing America’s Promise. GPO Access.

Retrieved August 22, 2010, from http://www.gpoaccess.gov/

WhiteHouse.gov. (n.d.). The President’s Budget for Fiscal Year 2011. The White House.

Retrieved August 22, 2010, from http://www.whitehouse.gov/omb/budget


| Published on September 16th, 2010 at 6:51 pm | Article of: financials, Money | Resource for: |

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