U.S. deficit control and private-sector wealth

Abstract

For over 30 years, American congresses and presidencies have consistently worked to reduce federal budget deficits. These efforts at deficit reduction/surplus generation did indeed contribute in many instances to lower federal budget deficits and even created surpluses. An apparent problem with deficit reduction/surplus generation is that every time government deficits are reduced, private-sector wealth also falls. Thus, growing levels of American household and business indebtedness are closely associated with the policy of reducing federal deficits. One way of alleviating the problem of growing household indebtedness is to reverse the policy aim of reducing federal budget deficits.

Keywords:

• deficit
• fiscal policy
• private wealth
• surplus