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A government budget deficit is the amount by which some measure of government revenues falls short of some measure of government spending.

If a government is running a positive budget deficit, it is also said to be running a negative budget surplus (and conversely, a positive budget surplus is a negative budget deficit).

Primary deficit, total deficit, and debt[link]

The meaning of 'deficit' differs from that of 'debt', which is an accumulation of yearly deficits. Deficits occur when a government's expenditures exceed the revenue that it generates. The deficit can be measured with or without including the interest payments on the debt as expenditures.^[1]

The primary deficit is defined as the difference between current government spending on goods and services and total current revenue from all types of taxes net of transfer payments. The total deficit (which is often called the fiscal deficit or just the 'deficit') is the primary deficit plus interest payments on the debt.^[2]

Therefore, if Failed to parse (Missing texvc executable; please see math/README to configure.): t

is a timeframe, Failed to parse (Missing texvc executable; please see math/README to configure.): G_t
is government spending and Failed to parse (Missing texvc executable; please see math/README to configure.): T_t
is tax revenue for the respective timeframe, then the primary deficit is

Failed to parse (Missing texvc executable; please see math/README to configure.): G_t - T_t \,

If Failed to parse (Missing texvc executable; please see math/README to configure.): D_{t-1}

is last year's debt, and Failed to parse (Missing texvc executable; please see math/README to configure.): r
is the interest rate, then the total deficit is

Failed to parse (Missing texvc executable; please see math/README to configure.): r D_{t-1} + G_t - T_t \,

Finally, this year's debt can be calculated from last year's debt and this year's total deficit, as follows:

Failed to parse (Missing texvc executable; please see math/README to configure.): {D_t} = (1+r)D_{t-1} + G_t - T_t \,

Economic trends can influence the growth or shrinkage of fiscal deficits in several ways. Increased levels of economic activity generally lead to higher tax revenues, while government expenditures often increase during economic downturns because of higher outlays for social insurance programs such as unemployment benefits. Changes in tax rates, tax enforcement policies, levels of social benefits, and other government policy decisions can also have major effects on public debt. For some countries, such as Norway, Russia, and members of the Organization of Petroleum Exporting Countries (OPEC), oil and gas receipts play a major role in public finances.

Inflation reduces the real value of accumulated debt. If investors anticipate future inflation, however, they will demand higher interest rates on government debt, making public borrowing more expensive.

Structural deficits, cyclical deficits, and the fiscal gap[link]

A government deficit can be thought of as consisting of two elements, structural and cyclical.

At the lowest point in the business cycle, there is a high level of unemployment. This means that tax revenues are low and expenditure (e.g. on social security) high. Conversely, at the peak of the cycle, unemployment is low, increasing tax revenue and decreasing social security spending. The additional borrowing required at the low point of the cycle is the cyclical deficit. By definition, the cyclical deficit will be entirely repaid by a cyclical surplus at the peak of the cycle.

The structural deficit is the deficit that remains across the business cycle, because the general level of government spending exceeds prevailing tax levels. The observed total budget deficit is equal to the sum of the structural deficit with the cyclical deficit or surplus.

Some economists have criticized the distinction between cyclical and structural deficits, contending that the business cycle is too difficult to measure to make cyclical analysis worthwhile.

The fiscal gap, a measure proposed by economists Alan Auerbach and Laurence Kotlikoff, measures the difference between government spending and revenues over the very long term, typically as a percentage of Gross Domestic Product. The fiscal gap can be interpreted as the percentage increase in revenues or reduction of expenditures necessary to balance spending and revenues in the long run. For example, a fiscal gap of 5% could be eliminated by an immediate and permanent 5% increase in taxes or cut in spending or some combination of both.^[3]

It includes not only the structural deficit at a given point in time, but also the difference between promised future government commitments, such as health and retirement spending, and planned future tax revenues. Since the elderly population is growing much faster than the young population in many countries, many economists argue that these countries have important fiscal gaps, beyond what can be seen from their deficits alone.

National budget deficits[link]

This article is outdated. Please update this article to reflect recent events or newly available information. Please see the talk page for more information. (November 2011)

Data are for 2004^[4]

United States deficit or surplus percentage 1901 to 2006.

Early deficits[link]

Before the invention of bonds, the deficit could only be financed with loans from private investors or other countries. A prominent example of this was the Rothschild dynasty in the late 18th and 19th century, though there were many earlier examples.

These loans became popular when private financiers had amassed enough capital to provide them, and when governments were no longer able to simply print money, with consequent inflation, to finance their spending.

However, large long-term loans had a high element of risk for the lender and consequently gave high interest rates. Governments later began to issue bonds that were payable to the bearer, rather than the original purchaser. This meant that someone who lent the state money could sell on the debt to someone else, reducing the risks involved and reducing the overall interest rates. Examples of this are British Consols and American Treasury bill bonds.

Deficit spending[link]

According to some economists, during recessions, the government can stimulate the economy by intentionally running a deficit.

Ricardian equivalence[link]

The Ricardian equivalence hypothesis, named after the English political economist and Member of Parliament David Ricardo, states that because households anticipate that current public deficit will be paid through future taxes, those households will accumulate savings now to offset those future taxes. If households acted in this way, a government would not be able to use tax cuts to stimulate the economy. The Ricardian equivalence result requires several assumptions. These include households acting as if they were infinite-lived dynasties as well as assumptions of no uncertainty and no liquidity constraints.

Also, for Ricardian equivalence to apply, the deficit spending would have to be permanent. In contrast, a one-time stimulus through deficit spending would suggest a lesser tax burden annually than the one-time deficit expenditure. Thus temporary deficit spending is still expansionary. Empirical evidence on Ricardian equivalence effects has been mixed.

Crowding Out Hypothesis[link]

The crowding out hypothesis is the assumption that when a government experiences a deficit, the choice to borrow to offset that deficit draws on the pool of resources available for investment and private investment gets crowded out. This crowding out effect is induced by changes in the interest rate. When the government wishes to borrow, their demand for credit increases and the interest rate, or price of credit, increases. This increase in the interest rate makes private investment more expensive as well and less of it is used.^[6]

Potential Policy Solutions for Unintended Deficits[link]

Increase Taxes or Reduce Government Spending[link]

If a reduction in a structural deficit is desired, either revenue must increase, spending must decrease, or both. Taxes may be increased for everyone/every entity across the board or lawmakers may decide to assign that tax burden to specific groups of people (higher-income individuals, businesses, etc.). Lawmakers may also decide to cut government spending.

Like with taxes, they could decide to cut the budgets every government agency/entity by the same percentage or they may decide to give a greater budget cut to specific agencies. Many, if not all, of these decisions made by lawmakers are based on political ideology, popularity with their electorate, or popularity with their donors.

Changes in Tax Code[link]

Similar to increasing taxes, changes can be made to the tax code that increases tax revenue. Closing tax loopholes and allowing fewer deductions are different from the act of increasing taxes but essentially have the same effect.

Reduce Debt Service Liability[link]

Every year, the federal government must pay debt service payments on their overall public debt. These payments include principal and interest payments. Occasionally, the federal government has the opportunity to refinance some of their public debt to afford them lower debt service payments. Doing this would allow the federal government to cut expenditures without cutting government spending.^[7]

See also[link]

• Balance of payments
• Balance of trade
• Current account
• Fiscal policy
• Generational accounting
• Government spending
• Government debt
• Government budget
• List of countries by current account balance
• Public finance
• Tax

US-specific

• Fiscal policy in the United States
• National debt by U.S. presidential terms
• Deficit hawk
• Starve-the-beast
• United States federal budget
• United States public debt
• Taxation in the United States

References[link]

External links[link]

Look up government budget deficit in Wiktionary, the free dictionary.

United States

• U.S. Government Net Saving - Graph of Historical U.S. Government Net Savings
• Death and Taxes: 2009 A graphical representation of the 2009 United States federal discretionary budget, including the public debt.
• United States - Deficit versus Savings rate from 1981 Historical graphical representation of the 12 month rolling Fiscal deficit versus the Savings rate of the United States. (since 1981)
• Government deficit calculator from AARP

Hong Kong

• Hong Kong Government Budget

Finland

• Statistics Finland - General government deficit and gross debt according to EMU criteria

Walter E. Williams, (born March 31, 1936) is an American economist, commentator, and academic. He is the John M. Olin Distinguished Professor of Economics at George Mason University, as well as a syndicated columnist and author known for his libertarian views.^[2]

Early life and education[link]

Williams was born into an African-American family. His family during childhood consisted of himself, his mother, and his sister. His father played no role in raising either child.^[3] He grew up in Philadelphia. The family initially lived in West Philadelphia, moving to North Philadelphia and the Richard Allen housing projects when Williams was ten. His neighbors included a young Bill Cosby. Williams knew many of the individuals that Cosby speaks of from his childhood, including Weird Harold and Fat Albert.^[4]

Williams was a talented high school student who displayed a very inconsistent performance in his studies. Following high school he came out to stay with his father in California, and attended one semester at Los Angeles City College, in regard to which he would later state that he was not ready yet to be a serious student.^[5] In 1959 he was drafted into the military, and served as a Private in the United States Army.^[4][6] While serving in the Army, he "waged a one man battle against Jim Crow from inside the army (where he was nearly court-martialed for challenging the racial order)."^[4] Williams:

wrote a letter to President John F. Kennedy denouncing the pervasive racism of the American government and military. “Should Negroes be relieved of their service obligation or continue defending and dying for empty promises of freedom and equality,” Williams demanded of the president. "Or should we demand human rights as our Founding Fathers did at the risk of being called extremists....I contend that we relieve ourselves of oppression in a manner that is in keeping with the great heritage of our nation.”^[4]

He received a reply from the Deputy Assistant Secretary of Defense, Alfred B. Fitt, a response which he termed "the most reasonable response that I received from any official."^[7]

Following his military service, he re-entered college as a far more motivated student. Williams earned both a bachelor's degree (1965) and a masters degree (1967) in economics from California State University, Los Angeles. He earned his Ph.D. from the University of California, Los Angeles in 1972. Speaking of his early college days, Williams says "I was more than anything a radical. I was more sympathetic to Malcolm X than Martin Luther King because Malcolm X was more of a radical who was willing to confront discrimination in ways that I thought it should be confronted, including perhaps the use of violence. But I really just wanted to be left alone. I thought some laws, like minimum-wage laws, helped poor people and poor black people and protected workers from exploitation. I thought they were a good thing until I was pressed by professors to look at the evidence." While at UCLA Williams came into contact with economists such as Armen Alchian, James Buchanan and Axel Leijonhufvud who challenged his assumptions. Never one to be over-awed by others, Williams regularly challenged his professors as well. But on examining the evidence of actual outcomes he came to feel such programs were abject failures. "I learned that you have to evaluate the effects of public policy as opposed to intentions."^[8]

While at UCLA, Thomas Sowell arrived on campus in 1969 as a visiting professor. Though he never took a class from Dr. Sowell, the two met and began a friendship that has lasted to this day. In the summer of 1972 Sowell was hired as director of the Urban Institutes Ethnic Minorities Project, which Williams joined shortly thereafter^[9] Correspondence between Sowell and Williams appears in the 2007 "A Man of Letters" by Sowell.

Academic career[link]

Williams has been a Professor of Economics at George Mason University since 1980, and was chairman of the University's Economics department from 1995 to 2001.

He has previously been on the faculty of Los Angeles City College, California State University – Los Angeles, Temple University, and Grove City College. Williams was awarded an honorary degree at Universidad Francisco Marroquin. He also attended Suffolk County Community College in Brentwood NY.

Writing career[link]

Williams has written eight books and hundreds of articles. His syndicated column is published weekly in approximately 140 newspapers across the United States, as well as on several web sites by Creators Syndicate.^[10]

Economic and political views[link]

As an economist, Williams is a proponent of free market economics and opposes socialist systems of government intervention.^[11] "I praise lassez-faire capitalism as being the most moral and most productive system man has ever devised. Capitalism is relatively new in human history. Prior to capitalism, the way people amassed great wealth was by looting, plundering and enslaving their fellow man. Capitalism made it possible to become wealthy by serving your fellow man."^[12] In advancing these theories, Williams has said "That's a challenge I love: making economics fun and understandable."^[13]

In the mid-to-late 1970s Williams conducted research into the Davis-Bacon Act of 1931 and on the impact of minimum wage laws on minority employment. His research led him to conclude the government's interventional programs were harmful. Among those state programs Williams was critical of were minimum wage and affirmative action laws, stating both practices inhibit liberty and are detrimental to the blacks they are intended to help. He published his results in his 1982 book The State Against Blacks, where he argued that laws regulating economic activity are far greater obstacles to economic progress for blacks than racial bigotry and discrimination.^[8] Subsequently Williams penned a number of articles detailing his view that increases in the minimum wage price low skill workers out of the market, eliminating their opportunities for employment.^[14][15][16] Williams believes that racism and the legacy of slavery in the United States are overemphasized as problems faced by the black community today. He points to the crippling effects of a welfare state and the disintegration of the black family as more pressing concerns. "The welfare state has done to black Americans what slavery couldn't do, and that is to destroy the black family"^[8] Though in favor of equal access to government institutions such as court houses, city halls and libraries, Williams opposes anti-discrimination laws directed at the private sector on the grounds that such laws infringe upon the people's right of freedom of association.

Williams views gun control laws as a governmental infringement upon the rights of individuals, and argues that they end up endangering the innocent while failing to reduce crime.^[17] Williams also makes the argument that the true proof of whether or not an individual owns something is whether or not they have the right to sell it. Taking this argument to its conclusion, he supports legalization of selling one's own bodily organs.^[18] He argues that government prohibiting the selling of one's bodily organs is an infringement upon one's property rights, asking "If I don't own my organs, please tell me who does?"^[19][20]

Regarding Federalism, Williams is in favor of power being in the hands of the states, with limited powers being held by the Federal government. This was the design of the founding documents, largely undermined by the events of the civil war.^[21]

"The War between the States settled by force whether states could secede. Once it was established that states cannot secede, the federal government, abetted by a Supreme Court unwilling to hold it to its constitutional restraints, was able to run amok over states’ rights, so much so that the protections of the Ninth and Tenth Amendments mean little or nothing today. Not only did the war lay the foundation for eventual nullification or weakening of basic constitutional protections against central government abuses, but it also laid to rest the great principle enunciated in the Declaration of Independence that 'Governments are instituted among Men, deriving their just powers from the consent of the governed.'"

In light of the founding documents, Williams concludes it is the right of U.S. states to secede from the union if they so wish, as several states attempted to do during the Civil War.^[22] He has gone on record as advocating the Free State Project in at least two columns and once on television. The Williams endorsement correlated with the largest single membership jump in the first 5000 phase of the project, a jump even higher than the results of the project being Slashdotted.

Williams believes programs such as affirmative action and minimum wage laws set up to aide minorities have, in fact, been harmful to them and stifled their ability to advance in society. "Affirmative action has led to, I believe, many Black people expecting favors from the system and not working as hard as they otherwise would. That is, if you know that you can get into college because of affirmative action—or some people call it diversity nowadays—well then why work as hard in high school? So it might undermine some of the spirit of people. And I think that the basic premise of those who advocate affirmative action is that the problems that Black Americans face today are the result of racial discrimination." In reaction to what he viewed as inappropriate racial sensitivity that he saw hurting blacks in higher education, Williams began in the 1970s to offer colleagues a "certificate of amnesty and pardon" to all white people for Western Civilization's sins against blacks - and "thus obliged them not to act like damn fools in their relationships with Americans of African ancestry." He still offers it to anyone. The certificate can be obtained at his website.^[23]

In his work, Williams builds on the economic theories of F. A. Hayek, Ludwig von Mises, Henry Hazlitt, and Milton Friedman,^[24] as well as the previously mentioned Thomas Sowell, and he has said of Ayn Rand's 1967 work Capitalism: The Unknown Ideal that it is "one of the best defenses and explanations of capitalism one is likely to read."^[25]

Besides his weekly columns, Williams has become known nationally as a highly popular guest host before the twenty million listeners of the Rush Limbaugh radio program when Limbaugh is away traveling. Reason has called Williams "one of the country’s leading libertarian voices."^[4] In 2009, Greg Ransom, a writer for the Ludwig von Mises Institute, ranked Williams as the third-most important "Hayekian" Public Intellectual in America, behind only Thomas Sowell and John Stossel.^[26]

Non-profit activities[link]

Williams serves on the boards of a number of non-profit organizations, including the Bruin Alumni Association and Grove City College.

Presidential draft campaign[link]

Cartoonist Bruce Tinsley, in his comic strip Mallard Fillmore, launched a campaign to draft Williams for the Republican presidential nomination in the 2008 United States presidential election.^[27] Although Williams initially stated that he wouldn't completely rule out the possibility, he ultimately decided against such a run, and endorsed Ron Paul.^[28]

Personal life[link]

Williams and his wife Connie (née Taylor) were married from 1960 until her death on December 29, 2007. They have one daughter, Devyn (b. 1975), who resides in Los Angeles, California.^{[citation needed]} Williams is a cousin of former NBA player Julius Erving.^[29][30]

In 2011, Dr. Williams retired from the board of directors of Media General. He served on the board of directors from 2001–2011 and was chairman of the Audit Committee.

Books[link]

• America: a Minority Viewpoint (1982) ISBN 0-8179-7562-4
• The State Against Blacks (1984) ISBN 0-07-070378-7
• All It Takes Is Guts: A Minority View (1988) ISBN 0-89526-569-9
• South Africa's War Against Capitalism (1989) ISBN 0-275-93179-X
• Do the Right Thing: The People's Economist Speaks (1995) ISBN 0-8179-9382-7
• More Liberty Means Less Government: Our Founders Knew This Well (1999) ISBN 0-8179-9612-5
• Liberty versus the Tyranny of Socialism: Controversial Essays (2008) ISBN 0-8179-4912-9
• Up from the Projects: An Autobiography (2010) ISBN 0-8179-1254-1
• Race and Economics: How Much Can Be Blamed on Discrimination? (2011) ISBN 978-0-8179-1244-4

See also[link]

• List of economists

References[link]

Notes

Bibliography

• Williams, Walter E. (1999) "More Liberty Means Less Government; Our Founders Knew This Well" Stanford, California: Hoover Institution Press. ISBN 0-8179-9612-5
• Williams, Walter E. (2010) "Up From The Projects" Stanford, California: Hoover Institution Press. ISBN 0-8179-1255-0

External links[link]

Wikiquote has a collection of quotations related to: Walter E. Williams

• Walter Williams Home Page at GMU
  • Biography
• Walter Williams Features at Creators Syndicate
• Syndicated articles (at townhall.com) (rss feed)(at Jewish World Review)
• Podcasts of Williams' recent articles
• Podcast featuring Williams Williams discusses economics and life on EconTalk.
• Audio interview with Walter E. Williams at National Review Online
• Walter Williams Quotes
• Biography and List of Articles written by Walter Williams at Capitalism Magazine
• Economics for the Citizen
• His Introduction (pdf) to Choosing the Right College
• Walter E. Williams Lectures from the Intercollegiate Studies Institute
• An Interview with Dr. Walter E. Williams at Free Market Mojo
• C-SPAN Q&A interview with Williams, March 18, 2012

Persondata
Name	Williams, Walter
Alternative names
Short description	American writer
Date of birth	1936-06-30
Place of birth	Philadelphia, Pennsylvania
Date of death
Place of death

Warren Mosler

Post-Keynesian economics
Warren Mosler speaking at War and Poverty, Peace and Prosperity Conference at the Levy Economics Institute
Born	(1949-09-18) September 18, 1949 (age 62)
Nationality	United States
Field	Modern Monetary Theory, Macroeconomics, Monetary policy
Alma mater	University of Connecticut (B.A.)

Warren Mosler (born September 18, 1949) is an American economist, president and founder of Mosler Automotive, and co-founder of the Center for Full Employment And Price Stability at the University of Missouri-Kansas City. He briefly ran for President of the United States as a member of the Democratic Party in the 2012 election before dropping out to run for U.S. Senate.

Background[link]

Mosler spent his early life in Manchester, Connecticut and was initially employed in Hartford before moving to New York City to work on Wall Street. In 1982, he began a hedge fund, which by the 1990s was largely turned over to his partners. Later, he relocated to the U.S. Virgin Islands to participate in a government-sponsored economic growth initiative.^[1]

Academically, he is known for his writings on Modern Monetary Theory, an economic theory that describes the way fiat money is created and utilized in modern economies.

Political campaigns[link]

In February 2009, Mosler declared his candidacy with the Federal Elections Commission to run for the office of President of The United States as an independent.^[2] In April 2010, he withdrew^[3] to run in the United States Senate election in Connecticut, 2010^[1], briefly as a Democrat, but ultimately as an independent. In the final tally he received 0.98% of the vote.

Personal life[link]

Warren Mosler resides in St. Croix in the United States Virgin Islands.

References[link]

External links[link]

• Center for Full Employment and Price Stability
• The Center of the Universe: Warren Mosler's blog
• Warren Mosler Interview on The George Jarkesy Show

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