Question

why do governments budget in deficit?

Answer 1

Budget deficit refers to a situation where the expenses of the government exceed revenue in the form of taxes and other sources. To check the budget deficit, a government needs to curtail certain expenditures, and increase revenue generating activities for mix the both together.

Continual budget deficit is necessary for a growing economy, as the government needs to spend more on various communities like education, infrastructure, health and other necessary activities. This deficit in budget is financed by the World Bank.

Sometimes, the budget deficit are also unplanned, in 2003 after the attack at the World Trade Centre, the United State government spent more than ever spent on Defence. Similarly, when Barack Obama was the president of The United States, about 1.4 trillion dollars were spent on Defence. So, the budget deficit can be planned or unplanned.