National Budget Deficit

Kolten Peterson
Outline

- National Budget Deficit

- Causes of Deficits and Surpluses
- Differences between National Deficit and National Debt
- Spending policies
- Inflation affecting the budget
- Discussion Questions
- How could the National Budget be adjusted in order to run a surplus?
- What could be a way the government can lower the National Deficit?
- What would you change with the current National Budget?
- How do you think the Consolidated Appropriations Act can increase the National Deficit?
General Information

- What is the National Budget Deficit?

- A deficit occurs when the federal government’s spending exceeds its revenues. The federal
government has spent $1.52 trillion more than it has collected in fiscal year 2023, resulting
in a national deficit. (via fiscaldata.treasury.gov)
- How does the National Budget Deficit compare to recent years?
- The deficit has increased $600 billion from last year. (October 2022 to August 2023)
- What is a surplus vs a deficit?
- The opposite of a budget deficit is a surplus, which occurs when the government acquires
more money than it spends. In the last 50 years, the federal government budget has run a
surplus five times, most recently in 2001.
Causes of Deficits and Surpluses

The size of the national deficit or surplus is largely influenced by the health of the economy and
spending and revenue policies set by Congress and the President. Legislation increasing spending on
Social Security, health care, and defense that outpace revenue can increase the deficit. While revenue
increased during the COVID-19 pandemic, from approximately $3.5 trillion in 2019 to $4 trillion in 2021,
increased government spending related to widespread unemployment and health care caused spikes
in the deficit.
National Deficit vs National Debt

To pay for a deficit, the federal government borrows money by selling Treasury bonds, bills, and other
securities. The national debt is the accumulation of this borrowing and spending. As the federal
government experiences recurrent deficits, national debt grows.
Spending Policies

Social security, health insurance, defense, and economic security programs make
up most of the national budget. Spending policies determined by congress
strongly correlate with the National Deficit and National Debt. The most recent act,
the Consolidated Appropriations Act, is a $1.7 trillion omnibus spending bill (which
is 20.5 billion above the previous fiscal budget) that will fund the U.S. federal
government for the 2023 fiscal year. It includes funding for a range of domestic
and foreign policy priorities, such as support for Ukraine, defense spending, and
aid for regions affected by natural disasters.
How Inflation Affects The Budget

Non interest spending and revenues generally have offsetting effects on the federal budget, however, a
corresponding rise in interest rates increases the nation’s borrowing costs, thereby increasing the
amount of future deficits and debt.
How This Relates to AP Gov

- Congress makes decisions on spending and revenue policies, such as the Consolidated
Appropriations Act.
- The National and State governments implement policies and regulations that directly affect the
National Deficit
- Taxes enacted by the federal government determine a large portion of income, a significant
factor for most surpluses in recent years.
Discussion Questions

- How could the National Budget be adjusted in order to run a surplus?

- What could be a way the government can lower the National Deficit?
- What would you change with the current National Budget?
- How do you think the Consolidated Appropriations Act can increase the
National Deficit?
Thank You
Sources
Sheiner Louise, “No need to panic about the budget deficit” Brooking, September 20, 2023
https://www.brookings.edu/articles/no-need-to-panic-about-the-budget-deficit/
Fiscal Data, “What is the National Deficit?” Treasury.gov, September, 2023
https://fiscaldata.treasury.gov/americas-finance-guide/national-deficit/
Horsley Scott, “The federal deficit nearly tripled, raising concern about the country's finances” NPR, July 13, 2023
https://www.npr.org/2023/07/13/1187540763/budget-federal-deficit-nationa-debt-ceiling
Platt Spencer, “How Does Inflation Affect The Federal Budget?” PGPF, August 14, 2023
https://www.pgpf.org/blog/2023/08/how-does-inflation-affect-the-federal-budget
CBPP, “Where do our federal tax dollars go?” cbpp.org, September 28, 2023
https://www.cbpp.org/research/federal-budget/where-do-our-federal-tax-dollars-go
Wikipedia, “Consolidated Appropriations Act” wiki.org, September 25, 2023
https://en.wikipedia.org/wiki/Consolidated_Appropriations_Act,_2023