How is the economy booming if we have a huge deficit?

Question

Are we spending money that our bewildered country can't really afford?

Answer 1

The present economy is based upon China and India's economy's as a global economy. The American economy is in shambles at home. The stock market only reflects were the stocks and investors have their money tied up at, and it isn't in America and in the American workforce. Americas market stability is failing with Republican policy. Why on Earth would you print and spread the American dollar outside of the USA and put your own Country's Federal Banking System in jeopardy?

Answer 2

If more liberals took classes in economics, there would be less liberals. One of the first things you learn there is about how the policies advocated by John Maynard Keynes got this country out of the Great Depression. These policies were, to summarize, deficit spending by the government to create wealth and jobs. So, to answer your question, the economy is booming precisely BECAUSE we are spending money.

For your second question, when we spend money that makes the economy grow, the country's ability to pay back that money grows as well. Look at it this way: when you get a student loan for your education, you are deficit spending (spending more money than you have). However, presumably the education you get with that money will increase your income, making what was before an unsustainable debt a mere pittance.

Having said this, we have reached a point where the economy is doing well enough that we could afford to cut back on spending, especially in non-essential areas. Raising tax rates is NOT the answer, as is it unclear that raising rates raises income (history has shown the opposite).

Incidentally, I think you may be one of those who is unclear on the difference between the deficit and the debt: The deficit is the amount in a single year's budget where spending outweighs income. The debt is the total accumulated amount that the government owes from all years. I say this because the deficit this year is not all that large (either in dollar figures or as a percentage of GDP).

Answer 3

The deficit is a measure of how recklessly our politicians are spending all that extra tax revenue the tax cuts generated. The private sector is booming because the tax cuts had a stimulating effect on the economy, profits increased, employment levels increased, etc. The deficit needs to be brought under control but it is a political issue (restraining those darn politicians who are not very fiscally responsible) not caused by weakness in our economy. Now, if the politicians don't stop their reckless spending, that could cause problems over time but our economy has traditionally run with both debt and a deficit.

Answer 4

A booming economy means a high level of economic activity. A high deficit means the government spends more than it takes in. The two are unrelated. True, deficits can increase the national debt over time and drain economic productivity in the future, but what really matters is how big that debt is relative to the overall economy. We have a large debt now and a deficit, but both are smaller relative to the overall economy than at most other times in history.

Answer 5

Psst, the deficit is dropping rapidly as a result of the booming economy. Those 'deficit counters' you see on web sites are programmed. They're not 'actuals'. They don't have any sort of 'tie in' to reality. Here's the reality from MSNBC, an organization not known for being friendly to Bush. The following is from over a year ago. It's even less now.

It pays to keep up.

Answer 6

The economy is being propped up by massive, unsustainable government spending. When the money runs out we are screwed. (except for the mega-rich)

Answer 7

absolutely the American dollar is said to be going down as there are alternitives like the Euro . all those barrels of oil from Iraq do not appear to be helping.

Answer 8

have you noticed the Dow Jones the last couple of weeks? We haven't had many "booming economy" questions for a while for a reason.

Answer 9

Neo-cons are great at slight-of-hand when it comes to economics. By the time the average Joe realizes he/she has been screwed, BOOM! here comes the recession.

Answer 10

the economy "booming" that is reported my FOX news only is not true. the economy is growing that is true, however it is doing so at the cost of the goverment's money (hence our money). the very big companies have mananged hook the customer with the bigest wallet....the goverment...which would be ALL of our wallets...