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Deficit Spending

  Deficit spending, in economic terms, may be a part of fiscal policy in which the government plans deficits in order to stimulate the economy during recession or depression. In prosperity, a balancing fiscal policy would call for a government surplus to retard inflation. The US has not pursued such a balanced fiscal policy. Generally, deficits have occurred in the US because of the unwillingness of Congress and the Administration to face the political heat required to balance the budget, that is, to raise taxes and fees to pay for the desired expenditures or to reduce the level of spending to coincide with revenues. In fact, the US Treasury has run a budget deficit through prosperity and recession in all but 5 years between 1949 and 1989. The most recent surplus was $.3 billion in 1960. TF  



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