Why does the United States run a deficit? Since 1980, the deficit has grown enormously. Some say it is a bad thing, and predict looming doom, others say it is a safe and stable necessity to maintain a strong economy. For nearly 150 years, the United States government managed to keep a balanced budget. The only time a budget deficit existed during these years was in times of war or other disastrous events. For instance, the government created deficits during the War of 1812, the recession of 1837, the Civil War, the depression of the 1890’s, and World War I. However once each incident ended the deficit was eliminated. Our nation’s founders were against debt. Jefferson wrote, “I place economy among the first and most important of republican virtues, and public debt as the greatest of dangers to be feared.” Budget deficits have grown larger and more frequent in the last half-century. Beginning with the New Deal, the federal government came to play a much larger role in American life. Federal spending which totaled less than $4 billion in 1931, went up to nearly $7 billion in 1934 and then over $8 billion in 1936. The United States entry into World War II sent annual federal spending soaring to over $91 billion by
1944; thus began the ever-increasing debt of the United States.
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