Efforts to Reduce the Budget Deficit
David â€œCraigâ€ Franklin
Prof. Shane Thompson
June 3, 2013
When government expendituresÂ exceed government tax revenues in a given year, the government is running aÂ budget deficitÂ for that year. The budget deficit, which is the difference between government expenditures and tax revenues, is financed by government borrowing; the government issues long-term, interest-bearing bonds and uses the proceeds to finance the deficit. The total stock of government bonds and interest payments outstanding, from both the present and the past, is known as theÂ national debt. Thus, when the government finances a deficit by borrowing, it isÂ addingÂ to ...view middle of the document...
This act was passed to try and mandate a balanced budget. It set targets each year for six years that the federal government had to meet. If these targets were met the deficit would decrease each year until it reached zero in 1991. Unfortunately, in 1991the budget had a deficit of $269.5 billion.
In 1990 Congress passed the Budget Enforcement Act of 1990 (BEA). â€œThe main attributes to this law were the act of combined spending caps with a "pay-as-you-go" provision in attempts to limit discretionary spending. Under this provision, reduction somewhere in the budget had to counteract any new program that required additional spending.â€ (Unknown Arthur, 2013) In this act if offsetting cost reductions were not found then there would be spending cuts across the board.
Another piece of legislation passed by Congress in the 1990â€™s was the Omnibus Budget Reconciliation Act of 1993. This act was only intended to reduce the growth of our national debt by cutting $500 billion from the deficit over a five year period. The main parts of this act were increases in taxes and decreases in spending. This made the income tax more progressive and it targeted the...