What Are Federal Budget Deficit Graphs Used For?


Quick Answer

Federal budget deficit graphs and tables can be used to compare federal budget deficits from year to year and to show to whom the federal government owes money. They can also show which parties were in control of the executive and legislative branches at the time of the deficit.

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Full Answer

If federal spending is equal to the amount of federal taxes collected in a given year, the federal budget is balanced. When federal taxes collected are greater than federal spending, a budget surplus exists. A deficit is created when federal spending is greater than the amount of federal taxes collected. When a deficit in the federal budget exists, the government must borrow money from other sources to fund deficit spending.

Sources that the federal government borrows money from include the Federal Reserve, federal accounts, local and state governments, domestic private investors and international investors.

During recessions, federal deficits tend to be greater because fewer people are able to find work and contribute to the budget through paying income taxes. As a result, federal spending increases as more people become eligible for need-based programs such as food stamps and unemployment benefits. Sometimes, lawmakers increase federal spending during a recession to stimulate the economy.

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