What is the budget deficit?

By Levi Anthony - Posted 4/25/2011

What created these deficits?

The deficit results from a number of factors which include:

1. The collapse of the economy at the end of 2008 and the slow recovery mean that the government is collecting less money.

2. Increase spending by the government in various areas from providing more money for the unemployed to funding wars in Iraq and Afghanistan.

3. Giving tax cuts, mainly to the wealthy. Both the Bush and Obama administrations gave substantial tax cuts to the rich. Tax cuts mean less money going to the government.

To put the deficit in perspective, here is another useful chart which shows that the United States is not alone in running huge budget deficits. Because of the recession that started in 2008, most of the rich countries have huge deficits as well.

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