In the beginning the Government only generated deficits during the War of 1812, the recession of 1837, the Civil War, the depression of the 1890s, and World War I. But, as soon as the war ended the deficit would be eliminated and the economy which was much larger than the amounted debt would quickly absorb it. But the Federal spending has grown over the years, especially starting in the 1930s in actual dollars and in proportion to the economy. President Roosevelt sought to use the full powers of his office to end the Great Depression. He and Congress greatly expanded Federal programs. Federal spending, which totaled less than $4 billion in 1931, went up to nearly $7 billion in 1934 and to over $8 billion in 1936. Then, U.S. entry into World War II sent annual Federal spending soaring to over $91 billion by 1944. Thus began the ever-increasing debt o

ming economy lead by President Clinton. In the 1980s the budget grew to record levels because the Government cut income tax rates, greatly increased defense spending, and didn't cut domestic spending enough to make up the difference. As a result, the national debt grew in size after 1980; growing from $709 billion to $3.6 trillion in 1990, only 10 years later.

efore it will not bring a lot of new customers. This example of frivolous spending is what makes a deficit dangerous. Then the governments net worth decreases putting it into serious debt.

What about allowing the government to run a deficit and avoid the negative aspects of inflation. Borrowing from foreign sources is a very common practice. Attracted by high interest rates and stability, foreigners now buy huge amounts of U.S. national debt. Of course this cannot be the perfect solution otherwise no one would be concerned about the debt. The problem with borrowing from external sources is the lack of control the government has over foreign currency and debts. Internal debts can be paid with increased taxes, inflation, and other monetary controls the government has but external debts can extremely damaging to a country if it cannot buy enough of the foreign currency to pay the interest.

What if the debt is not increasing as fast as we think it is? The dollar amount of the debt may increase but often times so does the amount of money produced from the debt. If deficit spending eliminates non-productivity then its direct monetary cost will be offset if not surpassed by increa

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Approximate Word count = 1050
Approximate Pages = 4 (250 words per page double spaced)