Fiscal deficit

When you spend more than you earn, you clearly are in debt but when the government does it, they call it a fiscal deficit.A fiscal deficit is calculated as a percentage of gross domestic product (GDP), or simply as total dollars spent in excess of income. In either case, the income figure includes only taxes and other revenues and excludes money borrowed to make up the shortfall.

Do not get confused between fiscal deficit and fiscal deficit. fiscal debt is basically the total debt accumulated from years of spending.

Where does the government get the extra money from?

The U.S. government has had a fiscal deficit in most of the years since World War II.

A fiscal deficit is not universally regarded as a negative event. For example, the influential economist John Maynard Keynes argued that deficit spending and the debts incurred to sustain that spending can help countries climb out of economic recession. he argued that government is going to spend the extra money on organizations etc. thereby generating employment.

However, a few fiscal conservatives argue that there should be a balanced budgeting to avoid the deficits and the government should reduce its spending.

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