Balanced Federal Budget. Justify Your Position for

¶ … balanced federal budget. Justify your position for or against a balanced federal budget by explaining the gains and losses associated with your position. A balanced federal budget: Is it a good thing? Why is a federal budget deficit so bad? The budget deficit is so politically contentious few seem willing to ask this simple question. Because of the anti-deficit hysteria, even some ordinary citizens will protest: 'I cannot spend at a deficit, why should the federal government?' However, this is a false analogy.

There are often good reasons (for individuals as well as governments) to go into temporary debt. Classical Keynesian economic theory states that the federal government must spent at a deficit level to stimulate the economy during a recession. This fuels money into the pockets of consumers and a rise in consumption results more tax revenue and lower unemployment.

"Macroeconomists have known for decades that the economy can be brought out of periods of ill health by having the government spends money when everyone else is pulling back on their own spending...of course.. Everyone would have been much happier if the economy had continued to expand, which would have made stimulative deficit spending unnecessary" but given the ebbs and flows of the business cycle, recessions are inevitable and the government must seek to cushion citizens against them (Buchanan 2009).

The risk of an economy spiraling into a depression means that government stimulus (spending) is required. Trying to balance the budget during a recession is disastrous. People have more need for economic assistance to support themselves, and withholding aid in the form of food, healthcare, education for children, and other critical necessities will save money in the short run but ultimately hurt the long-term future of the country. The question is not if budget deficits are 'bad' or 'good' but how they are being used.

If they are being used in a positive fashion, to help the government get out of a recession, then they should not be viewed with disdain. However, it should be noted that classical Keynesian economic theory held that the government should attempt to rectify the problem of being in debt during 'good times' by curtailing government spending and taking in more tax revenue when the economy is healthy.

Time has shown us that once popular social programs are put into effect, it can be very difficult to cut them, even when the economy is good. This can result in budget deficits going up even during prosperous times. But some economists argue that as long as the additional spending is an investment in the future (such as employing people to build up the nation's infrastructure) this type of deficit spending is not necessarily a bad thing, either. "Support for basic research and development, education at.