How to lower the budget deficit?

What are ways that the government can lower the budget deficit?

5 Answers

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  • John M
    Lv 7
    9 years ago
    Favorite Answer

    The deficit is the difference between annual spending and annual revenue. To lower the deficit you can spend less money or take in more revenue, or both. You can also stimulate the economy using short term methods that increase the deficit in the short run, in order to increase revenues in the longer run. You can also increase the supply of money, and pay back debt with cheaper dollars. This will allow you to spend less money on debt service in the short run, but you will be forced to pay higher interest rates on replacements for maturing bonds, and end up spending more to borrow in the long run, and harm the financial position of anyone holding assets that do not go up with inflation.

  • 9 years ago

    The deficit is simply the difference between how much we make and how much we spend.

    There are two ways.

    1) Lower spending.

    2) Increase how much we make.

    Or a combo of the two.

  • 9 years ago

    A government can lower its deficit the same way you can, by spending less than its income.

  • meg
    Lv 7
    9 years ago

    Reduce spending or increase revenue by either increasing tax rates or increasing the tax base (GDP)

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  • Anonymous
    9 years ago

    increase taxes and/or cut government programs.

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