Deficit Friend or Foe

Deficit: Friend or Foe In the essay Why is the Deficit a God Send and Five Other Economic Heresies by Walter Russell Mead he discusses the concepts of national debt and budget deficit. Both the debt and the deficit have some positive and negative consequences. The deficit can play a positive role in an economy in economic growth. To fully support my argument that the deficit is good for countries such as the United States and Canada I would like to make the following points. The debt is the sum of the deficits that are owed to the banks that have lent the money to the country. A budget deficit occurs when the countries balance of expenditures minus the income it receives is equal to a negative number this causes the country to have a debt to other countries (Parkin 611). In most countries a balanced budget is not efficient additional funding is necessary to support all of the programs in place. A country can survive living in debt because unlike private citizens the governments of both Canada and the United States rarely have to pay back their debts to other countries. If a person takes out a loan for any reason they have a set date when the loan has to be repaid. The lenders are more flexible for governments when the borrowing period has expired they can rollover the loans. This extension of the loan enables the governments to survive by only paying the interest on the loan with out ever scratching the surface of the principle. The deficit is positive for growing countries even though it means going deeper into debt. The misconception people have about the deficit is when they try to relate their personal finances to that of the country. When small Businesses borrow money they have to eventually repay it so it would be crazy to spend more in a year then you make. A deficit in the budget of a household or small company does not work is because you are not economically growing at a rate in which you can…

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