Why the Deficit Is a Problem

Abstract

Since I was born in 1967, there have only been 4 years in which the US government took in as much money in taxes as it spent: 1969, 1998, 1999, and 2000. In the other 40 years, the federal government of the United States had an annual budget deficit. The government was able to spend more than it took in because it could easily borrow the money necessary to make up the shortfall by issuing government bonds, which simply means that investors loan money to the government, and in return, the government agrees to pay investors interest and principal over a specified period of time. The federal government pays the lowest possible interest rate because it has never failed to pay creditors the interest they were due. Even with the debt ceiling debate, the interest rate the US government is currently paying on our debt is very low.