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Government Spending, Deficits, and Keynesian Economics Essay

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A growing government is opposite to America’s economic interests because the various methods of financing a government - taxes, borrowing, and printing money have harmful effects upon the economy. There are many reasons why there is a high deficit in the United States such as extensive spending. This is true because government spending is often economically destructive, regardless of how it is financed. There are many causes of the steady growth in U.S. trade deficits. There are many people are against the high deficits especially economists.

“Economists define government intervention in the foreign exchange market as the buying or selling of foreign exchange for the purpose of manipulating the exchange rate. “(Case, pg. 398) Economists would agree that there are situations which lower levels of government spending would improve economic growth and other situations in which higher levels of government spending would be pleasing. Economists will generally agree that government spending becomes a burden. Economists feel as though by raising the deficit we are spending money the economy does not. If United States would raise taxes to help pay off the deficit that would not work since so many Americans are out of work. In addition, they believe that raising the GDP taken by the state sector has a negative effect on the growth of the private sector of the economy. Even though the economy could benefit from the budget deficit such as economic growth, the economists do not want to take a chance on that. Also, some economists are also concerned that higher borrowing by the government may also openly result in reduced utilization spending. They argue households recognize that higher current government borrowing results in highe...


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...ful spending because it is taking a toll on our future, our children’s future, and our children’s children future.



Works Cited

1. Case. Principles of Macroeconomics, 9th Edition. Pearson Learning Solutions
2. United States Economy - Monetary and Fiscal Policy." Country Studies. U.S. Department of State. Web. 15 Aug. 2011. .
3. Mitchell, Dr. Daniel. "The Impact of Government Spending on Economic Growth." Conservative Policy Research and Analysis. 15 Mar. 2005. Web. 16 Aug. 2011. .
4. Pettinger, Tejvan. "Monetary Policy vs Fiscal Policy | Economics Blog." Economics Help - Helping to Simplify Economics. Web. 09 Aug. 2011. .


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