Discuss whether a government should always aim for a surplus budget?

Answer 1

There are only two economically viable reasons for running a budget surplus: 1) Slow down an economy experiencing rapid inflation and 2) To save for future potential recessions.

Running a continuous surplus is a good idea for business, but unnecessary taxing (pun intended) and distortionary for a government.

This is a different question from "Should a government reduce costs" - absolutely, but a surplus requires revenues in excess of costs.

Answer 2

Definitely not, the above answers are right. There is no virtue in a surplus -- that simply means that the citizens have been overtaxed, with too much money being diverted to the most unproductive part of the whole economy (the government).

Somebody PLEASE alert the news media.

BTW the government does not save money -- it can only spend it. Surplus money is not saved, only spent. For example, there is no money or any real asset in the Social Security "Trust Fund", only pre-authorized permission to borrow money in the future, because current social security surplus cash is spent every year -- as mandated by law.

The best means the government has of "saving money" is to leave it in the hands of the population, which will maximize economic growth and productivity, thereby growing the tax base so that the government can tap into it with taxes in the future, when needed.

Answer 3

Ideally, a government would match their budgeted expenses to budgeted revenues.

That said, a hard and fast "balanced budget" rule is likely one factor that kept the Great Depression from being just another mild recession.

It caused the government to further tighten the money supply during an already deflationary period.

Answer 4

No, why should the government have a surplus of money that isn't theirs. A surplus is worse than a deficit.