Budget Deficit and National Debt

The economy of a country is the major influence of the lively hood of the citizens. In the running of the economic issues, the Ministry of Finance encounters several factors. One of these factors includes the budgeting of 5he financial year, a key responsibility of the Ministry of Finance. However, more often than not, the government faces deficits in the projected financial budget. This brings a conflict of priority between covering the budget deficit and boosting the economy. This paper addresses the conflict between these two factors of the economy involved in this wrangle.

Choice between Boosting the Economy and Dealing with the Budget Deficit.

The concern among the majority of the American people has been the outrageous budget deficits created each year. This deficit results from many factors in the economy. The major reason for the high deficit, which averages about 900 billion dollars, is government overspending. Other factors include tax reduction, the war on terrorism as well as the spending classified as mandatory. There is a conflict of interest between the covering of the budget deficit and the boosting of the economy. However, the president together with the members of Congress should focus more in the latter rather than the former (Fink & High, 1987).

Statistics show that the advantages of overspending far outweigh the cons. This comes from the higher rate of growth of the economy because of overspending. Overreliance on the reduction of the budget deficit, as much as it gives the population a since of security, would be disastrous to the economy as well as the majority of the citizens of the country. The only option that can be of better results is the engagement in both processes that is boosting the economy while at the same time trying to reduce the deficits. However, this cannot be practical, as it would mean taking measures to keep overspending on the economy to a minimum. Boosting the economy is in itself, a solution to the reduction of the budget deficits (Gordon, 1997).

This occurs when the generated capital because of a flourishing economy serves to pay up for the deficits. Focus on reducing the budget deficit would also translate directly to a shrinking economy. The results of this are that the rate of unemployment would sky rocket. All people, who are championing for the reduction of budget deficit, would be in the forefront of the public outcry. Because of the reduction, the ratio of the total economy to the debt would worsen. Focusing on boosting the economy is, therefore, a priority now, as it will result to a creation of jobs. Implementation of measures for the reduction of the budget deficit has got priority after the completion of this process.

The right time to tackle budget deficit. The concern of the majority of the people on cutting the budget deficit at the present moment may be a little bit misplaced. The question that most people should ask themselves is: “what would happen in the end if the government takes that approach?” The shrinking of the economy, as previously mentioned, would be catastrophic to the citizens. The most logical thing to do now is to focus on boosting the economy..

This is the only way out for the country. The success of this approach shows in the recovery of the 2008 recession. To overcome the recession, the government engaged in an economic stimulus approach. Now, more people are enjoying job securities and a standard life thanks to the approach taken by the US president during that period. However, ignoring the high budget deficit can be equally disastrous (Kelly & Kelly, 2008).

The euro zone crisis is the best example of the result of neglecting the deficit on the government budget. What follow the success of boosting the economy of the country are measures to eliminate the budget deficit. Now, many countries are willing to lend the government funds. However, the volatility of the monetary system is unpredictable and can affect negatively on the government. This is because it may lead to a demand of payback by countries such as China and as a result, in the process cripples the government t revenue, leading to a major financial crisis.

This can only mean that the plans of the government to engage into the economic stimulus project should be backed with a good system to breakdown the trend of budget deficit due to the government over expenditure and other factors. However, it would be wise for the government to take care of the economy before investing any effort in reducing the budget deficit. This will ensure a growing economy while at the same time minimizing any chances of a threatening economic crisis.

Measures to Curb the Economic Problems. Now, the efforts to boost the economy are the most important ones. The future strategies must however, take into consideration the reduction of the budget deficit. The government can deal with the rate of over expenditure in a number of ways. The first way is by focusing on a few transformations in the tax policy of the government. Maintaining the tax policy now, which has some good benefits, is the starting point. The policy to exempt the low-income citizens from paying income tax should stand. This is because these citizens contribute a huge share of their income in the form of payroll and sales taxes.

The changes made should include increasing taxes on the rich citizens of the country. The perception that increasing the income tax on the rich will eventually affect negatively on the economy is a very wrong one. Such an increase will cater well for the budget deficit. As a result, eliminating the tax cuts on the rich that are presently there will be of much help and instead, increase the taxes. The next step of curbing this deficit in the future should be increasing the taxes on Medicare as well as Medicaid. This is because the expenditure on these services by the government is one of the major contributors to the budget deficit.


In conclusion, the current focus of the government should be to boost the economic growth of the country rather than to focus on measures to reduce the budget deficit. This will maintain the job security of most of the citizens. As much as dealing with the budget deficit is necessary, the concern is mainly a problem of the future. A transformation of the tax policies of the government is one of the best methods of dealing with the budget deficit. This includes increasing the income tax on the rich citizens and on health care.