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In economics, a deficit is an excess of expenditures over revenue in a given time period.
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- The only way you can finance a deficit is by inflation. You cannot raise this amount of money by genuine borrowing. You borrow from the banks, which create credit for the purpose. A large government deficit is a certain way to inflation.
- Friedrich Hayek, in "Business People; A Nobel Winner Assesses Reagan", The New York Times (December 1, 1982)
- But I have an uncomfortable feeling that this prosperity isn't something on which we can base our hopes for the future. No nation in history has ever survived a tax burden that reached a third of its national income. Today, 37 cents our of every dollar earned in this country is the tax collector's share, and yet our government continues to spend 17 million dollars a day more than the government takes in. We haven't balanced our budget 28 out of the last 34 years. We've raised our debt limit three times in the last twelve months, and now our national debt is one and a half times bigger than all the combined debts of all the nations in the world. We have 15 billion dollars in gold in our treasury; we don't own an ounce. Foreign dollar claims are 27.3 billion dollars. And we've just had announced that the dollar of 1939 will now purchase 45 cents in its total value.
- But great as our tax burden is, it has not kept pace with public spending. For decades we have piled deficit upon deficit, mortgaging our future and our children's future for the temporary convenience of the present. To continue this long trend is to guarantee tremendous social, cultural, political, and economic upheavals. You and I, as individuals, can, by borrowing, live beyond our means, but for only a limited period of time. Why, then, should we think that collectively, as a nation, we're not bound by that same limitation? We must act today in order to preserve tomorrow. And let there be no misunderstanding: We are going to begin to act, beginning today.
- Ronald Reagan, First Inaugural Address, January 20, 1981,
- All during this last 12 years the Federal deficit has roared out of control. Look at this: The big tax cuts for the wealthy, the growth in Government spending, and soaring health care costs all caused the Federal deficit to explode. Our debt is now 4 times as big as it was in 1980. That's right. In the last 12 years we piled up 4 times as much debt as in the previous 200. Now, if all that debt had been invested in strengthening our economy, we'd at least have something to show for our money: more jobs, better educated people, a health care system that works. But as you can see, while the deficit went up, investments in the things that make us stronger and smarter, richer and safer, were neglected: less invested in education, less in our children's future, less in transportation, less in local law enforcement. An awful lot of that money was just wasted. This matters. When you don't invest in jobs and education and economic opportunity, unemployment goes up and our incomes go down. And when the deficit gets bigger and bigger and bigger, the Government takes more of your money just for interest payments. And then it's harder for you to borrow money for your own business or to afford a new home or to send a child to college.