The U.S. Federal Budget Deficit

Running head: BUDGET DEFICIT 1
The U.S. Federal Budget Deficit
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BUDGET DEFICIT 2
The U.S. Federal Budget Deficit
The government of the United States make a budget annually. The budget is a
detailed plan that describes the acquisition and use of financial and other resources over some
time period in the future. It reflects government’s priorities and how they are going to be
financed. Government projects are majorly financed by tax collections and government
borrowings. A budget deficit occurs when the tax collected cannot fully finance the budget
(Tankersley, 2018). Therefore, the government has to borrow more funds from domestic and
international institutions. A budget surplus on the contrary occurs when taxes collected exceed
the financing needs of the budget. This essay discusses the Federal budget deficit in the United
States in the recent years.
The United States last recorded a trade surplus in the 2001 fiscal year. Afterwards, the
country has witnessed a continuous budget deficit leading to a heated discussion over the
country’s budget projections. The budget deficit in 2009 was 9.8 percent of the country’s gross
domestic product (GDP). By financial year 2018, the budget deficit had declined to 3.8 percent
of GDP (Grennes, Fan & Caner, 2019). In 2017, the budget deficit was $666 billion. In 2018,
the budget deficit rose to $ 779 billion which was an increase of 17 percent from 2017. In the
first quarter of 2019, the budget deficit grew by 77 percent compared to the same period in 2018
(Tankersley, 2018). The congressional budget office predicts a continued rise in budget deficit in
the future. Its estimates indicate that, budget deficit will increase from 3.9 percent in 2018 to 9.5
percent in 2048.
The budget deficit rises when the rate of government spending is higher than the rate
of growth in government revenue. The rise in budget deficit in the recent years is due to a
significant decline in tax revenues and rising government spending. The Republican tax reform