what is deficit spending? and how does it work?
- Hubris252Lv 71 decade agoFavorite Answer
Deficit spending occurs when the government, any government, wants to spend more than money than it is prepared to take from the people in taxes. The government auctions bonds to the people and uses the revenue for whatever purpose. In the future a portion of whatever tax revenue the government does collect must go toward paying the interest and eventually the principal on this debt. It's the same thing as when people put big purchases on their credit cards and pay them off over time - with all of the drawbacks.