Talk:Government budget balance

The sections of this article are completely out of sequence.

I think it is a result of the merge of articles on Balance and Deficit. The article is about budget balance, but it starts off talking about deficits and debt, and only after that talks about primary balance and sectoral balances. THEN there is an overview. Followed by more on deficits.

Unless anyone objects I propose to rearrange the sections, start with Overview, then Balances in general, then deficits. Maybe insert something on Surpluses before that. Prosopon (talk) 02:01, 27 September 2016 (UTC)

This Entire First paragraph takes a common knowledge point of view in that it primarily repeats inaccurate common knowledge about the impact and role of fiscal policies and deficits.

In the real world inflation, an increase in the general level of prices, goes hand in hand with high utilization and low unemployment and dozens of other combinations of causes. So governments, or their central banks which can typically move much faster, must lean against the wind to prevent overly cyclical booms and busts. One part, among many, of this "taming of the business cycle" is what is now called quantitative easing and used to be called open market operations. Quantitative easing eighty years ago in the time of Hayek and Keynes meant open market purchases that flowed newly created money into the commercial banks to become loanable funds to encourage the expansion of jobs and production in the real economy; today quantitative easing as practiced by the Federal Reserve primarily flows money abroad and into the financial markets such that little, if any, ever reaches the real economy and that which does may not impact the real economy due to higher reserve requirements and loan requirements being imposed by the Federal Reserve and other regulators.

I agree, this article needs to be updated to include a discussion of deficits and surpluses in a sovereign fiat currency issuing nation such as the USA, Canada, Australia, etc. — Preceding unsigned comment added by 204.76.196.12 (talk) 17:41, 12 September 2013 (UTC) (The preceding statement is naive and meaningless)

This entire article and the fiscal, deficit, central bank, money section of Wikipedia is grossly inaccurate and misleading about the role and impact of the various aspects of fiscal policies. It merely repeats the inaccurate common knowledge purveyed by those who have never studied macroeconomics or, if they did, studied it on the naive assumption that the theories and policies (Hayek and Keynes) that applied to the economy of the UK of eighty years ago still apply to the economy and institutions of the US today. Wikipedia should consider assembling a small group of trained macroeconomists with appropriate degrees and real world experience in business and commercial banking. And they would hopefully be worldly men and women familiar with the work of John Lindauer and the late George Stigler instead of merely idea-less "quants" trying to prove they are "scientists" by using questionable data to test the theories and policy suggestions of Hayek and Keynes for the US economy as if today on the naive premise that it is similar to the economic realities and institutions of the UK of eighty years ago that Hayek and Keynes theorized about. Alternately Wikipedia could just lift the appropriate sections from Lindauer's "The General Theories of Inflation, Unemployment, and Government Deficits." His students recently had it reissued because it seems he was right on the mark as to what would and would not work to eliminate inflation and unemployment in today's US economy under today's institutions and structures.

Incorrect Redirect for Budget surplus

• There is a very wrong redirect here from Budget surplus. Budget surplus is the complete opposite of budget deficit. Someone should help expand the budget surplus article.Smallman12q (talk) 00:34, 26 January 2009 (UTC)

Here's a citation for the FY 2004 US budget deficit figure: US Treasury Department FY 2004 Budget Charts (it's a pdf file). See the deficit figure under the 2004 Actual column on page six. - Walkiped 14:28, 6 Nov 2004 (UTC) -- Here's a good set of tables on historical budget DaTa.

http://www.whitehouse.gov/omb/budget/fy2004/pdf/hist.pdf

Ellsworth 22:08, 24 Jan 2005 (UTC)

Some info on what Bush has done to the budget deficit would be nice. I'm not American and have no idea though, so can't add it myself Dan100 11:16, Feb 21, 2005 (UTC)

The U.S. section already mentions that there were surpluses from 1998-2001, and that we've since returned to deficit spending. It's not entirely accurate to pin that on Bush, since all spending and revenue laws have to be passed by Congress before the president can sign them into law. - Walkiped 15:34, 21 Feb 2005 (UTC)

This is accurate to pin it on Bush, since the budgets were created by his branch and approved by a unilateral Republican Congress. You would be right if we were talking about Reagan who did not enjoy a unilateral government, but Congress, until the elections of '06 was a rubber stamp for Bush's budget proposals.

The Bush figures are inaccurate since they don't account for war spending as part of the budget. So in fact the deficit is bigger than the government stats claim. 71.203.209.0 00:55, 11 April 2007 (UTC)

And the fact of a larger deficit is a problem how? It adds to non-government sector wealth. The problem is in how this is spent and where it goes. If Bush's spending was being sucked by multinationals that's a problem. To deficit spend to add to the general public income (and create economic activity) is sane economics. A surplus, as stated at the top of this section, is the exact opposite and when the government is running the surplus the private business (or more usually the private domestic part of that) sector runs the deficit. This is called 'austerity'. 86.87.191.180 (talk) 17:11, 21 October 2022 (UTC)

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Would it be possible for someone (preferably an economist) to post what a deficit does to an economy/what the general consequences of a prolonged deficit is?

Why this page contain information about United States?

This definition is incomplete...

Onesimplehuman 17:41, 30 April 2006 (UTC) I am not an economist, however, I am currently in an ECON class for my masters. During my research on "fiscal consolidation", I have been looking for a good defition on "fiscal deficit". My search lead me here. To me, the current defition on this site lacks the differences between budget and trade deficits. These are both very important topics in econ. There has to be an economist out there who would be willing to correct these.

I read this field. I could understand some thing about goverment deficits and debts. But I did not know why US can spend about 300 USD billion for strenghtenning its army instead of using one partition of this money for society actions maybe it is better than now. For example using its money to help poor people that they can work and earn money for their live by themselt in poorest or developing nations all over the world. there maybe is me in. Thank you.

How does it feel in your little simplistic world? When you hit 18 your limited mental capacity will cancel out my vote, that makes me sad.

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Yea, this isn't very clear yet. I came here trying to figure out how deficits affect GDP in the short and long run. The chart about the deficit as a plus or minus percentage sign doesn't specify what it's a percentage of either. I assume it's a change over a previous year, it would be nice if that was specified though? 71.172.174.19 06:27, 2 August 2007 (UTC)

The percentage is the surplus or deficit. +4% means a budget surplus of 4% whereas -25% means a budget deficit of 25% 64.230.75.40 18:27, 26 October 2007 (UTC)

"The human by-products were unfathomable."

What in the world does that mean? I came across it in the third paragraph of this article. It sounds totally incoherent. Maybe it's just me, but I can't figure it out. 190.41.20.44 23:06, 14 November 2007 (UTC)

Appears to have been removed. — Preceding unsigned comment added by 137.111.13.200 (talk) 04:00, 8 June 2014 (UTC)

Can someone clarify this?

"Increased levels of economic activity generally lead to higher tax revenues". It seems like that ought to have "ceteris paribus" after it. After all, as studies of the Laffer curve have shown, increased ecnomic activity,if caused by lowering of taxes, will not increase revenue.74.219.149.67 (talk) 18:44, 4 October 2008 (UTC)

I think the term "generally" allows for this exception. Even in the area of taxation it depends on the type of tax and where you are on the curve. Morphh ^(talk) 21:46, 04 October 2008 (UTC)

Clearly it does because a tax cut can be a form of spending. It is the decision not to destroy (by taxation) money spent into the economy. Taxes aren't 'revenue' in the sense of 'funding' they are a fiscal space mechanism. 86.87.191.180 (talk) 17:14, 21 October 2022 (UTC)

Does monetizing debts cause rapid inflation or doesn't it?

"Monetizing debts, however, can cause rapid inflation (but does not necessarily do so)" surely if it "does not necessrily do so" then it cannot be said to "cause" rapid inflation. I think the sentence needs a bit of editing, and maybe a bit more thought. —Preceding unsigned comment added by 81.187.233.172 (talk) 13:57, 16 March 2010 (UTC) Yes, it needs editing because monetizing debts does not necessarily cause rapid or any other inflation.

We are now embarked on QE2. And if the FED follows through with it's plan to buy $600B in debt over the next 6 months we will have the answer to this question. I am betting that the inflation monster stays hidden in the underwear of the trickle down toadies.The Trucker (talk) 05:49, 26 November 2010 (UTC)

Typo spotted in above comment: possessive pronoun shouldn't have apostrophe. s/it's/its/ 198.144.192.45 (talk) 06:47, 4 January 2011 (UTC) Twitter.Com/CalRobert (Robert Maas)

...so typical of this site. I’m trying to find out what “budget deficit” means. I enter this common term in the search field and what do I find? —Preceding unsigned comment added by 69.168.116.92 (talk) 18:03, 1 January 2011 (UTC)

Article needs clarification that deficit is rate of money per time

The first section "Primary deficit, total deficit, and debt" needs to clarify right up front that "deficit" is a rate of money per unit time, not an absolute amount of money. For example, it makes no sense to say (as Gwen Ifill did on tonight's PBS NewsHour) taht Michigan's deficit is $2 billion, because that makes no sense, it's the wrong units. Michigan's deficit would be $2 billion *per*year*, or Michigan's *yearly* deficit would be $2 billion.

This is analagous to the distinction between distance and speed. For example, the speed of light isn't one foot, or 186000 miles, it's (appx.) one foot per nanosecond, or (appx.) 186000 miles per second. Or a light-nanosecond is (appx.) one foot.

Note that GNP (Gross National Product), GDP (Gross Domestic Product), are likewise money per unit time. Thus deficit can be expressed as a percentage of GNP or GDP since they are in the same units.

198.144.192.45 (talk) 06:35, 4 January 2011 (UTC) Twitter.Com/CalRobert (Robert Maas)

198.144.192.45 (talk) 06:39, 4 January 2011 (UTC) Twitter.Com/CalRobert (Robert Maas)

I don't see any issue here; normally deficit is given for the accounting period, usually one year, often calendar year. If something else is meant (first half, third quarter, whatever) of course it needs to be specified. --Sivullinen (talk) 21:13, 8 October 2011 (UTC)

In Economics, the distinction you're trying to make here is the distinction between stock and flow amounts. Benuel (talk) 14:42, 20 November 2011 (UTC)

I think Robert has a point here. Of course, it is commonly understood that the deficit is meant being incurred over the period of one year (if not stated otherwise). Hence, I would not criticize PBS for not spelling this out. However, here we at an encyclopedia. Our task is to clarify terms, and it help a great deal to mention that the deficit is a flow amount and no stock, as Benuel puts it. I will see if I can fit this in the article somewhere. Tomeasy _{T C} 23:32, 20 July 2012 (UTC)

Primary deficit, total deficit, and debt

In the chapter "Primary deficit, total deficit, and debt" there are simple equations that connect deficit and debt. It seems they are too simple. If you look e.g. at Eurostat document "Provision of deficit and debt data for 2010 - first notification" http://epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/2-26042011-AP/EN/2-26042011-AP-EN.PDF it is easy to see that the simple equation doesn't hold. Something missing? I cannot explain. Sivullinen (talk) 14:17, 7 October 2011 (UTC)

Can you be more specific: Where in the document do you find evidence that our equations are incorrect? Tomeasy _{T C} 23:23, 20 July 2012 (UTC)

Simple enough, the change in debt does not equal to the deficit, for almost any country, as the equations of the article claim. But I think I have the answer to my question: the debt shown in the statistics is the gross debt; deficit is the net lending/borrowing. This is stated already in the introduction chapter of ESA95 "Manual on Government Deficit and Debt" [1] and is shown in more detail e.g. in Table 3A: "Provision of the data which explain the contributions of the deficit/surplus and the other relevant factors to the variation in the debt level (general government)" of Annex 2. Completed tables for the EU countries are available e.g. in the document "Government finance statistics, Summary tables - 2/2011" [2]. --Sivullinen (talk) 19:27, 23 July 2012 (UTC)

And then there is the interest paid on the debt, which adds to the primary deficit. Tomeasy _{T C} 20:26, 23 July 2012 (UTC)

For a short and overall explanation of how debt levels and changes in debt levels are calculated, I can recommend to read page 7 about "Net borrowing" and page 10-12 about "Debt and debt levels", written as methodoligy notes at the Economic Spring Forecast appendix (Part 1: tables) published by the European Comission. As you already mentioned, Government debt will not only change by the amount of yearly "budget deficit", but also according to the "stock-flow adjustment" (primarily comprising of the governments buy/sell of financial assets/liquidity). While changes to the debt-to-GDP ratio are also affected by the nominal GDP growth, as this figure will help to diminish the denominator of the equation. Danish Expert (talk) 11:12, 7 August 2012 (UTC)

Propose move

I would like to move this article to Government budget balance. GB deficit is just one way the balance can turn out, thus negative. The article could just as well be termed GB surplus, just that this is a bit less common in reality. What this article is actually talking about is the GB balance.

This misnomer - as I would call it - calls then for awkward definitions such as "negative deficit is a positive surplus" or "negative surplus is a positive deficit". After all, the term GB surplus must be mentioned and explained as well, as it is equivalent simply being its inverse. This approach is far from elegant. Conversely, starting with the term balance defined as revenues minus spending, a deficit is simply a negative balance and a surplus a positive balance. This is generally understood with common language and without scratching heads.

Currently, Government budget balance redirects to Government budget, which makes absolutely no sense. The latter article is focused on the budget as such (how the bill is passed, its constituents, etc) but not at all how revenues and expenses balance. So I think this redirect (for GB balance) should at least change to here, if we do not agree on even moving the present article to GB balance.

Let me know what you think. Tomeasy _{T C} 00:07, 21 July 2012 (UTC)

Support: Today I attempted to wikilink the term "Government budget balance" in another article, and also was surprised to find it was just a redirect to "Government budget", which wrote nothing about the balance. Thus, I agree with your proposal to rename the current article "Government budget deficit" to "Government budget balance" (with both the "Government budget deficit" and "Government budget surplus" term being a redirect to this article). The subject of GB surplus and GB deficit can easily be covered by the same article, as the two terms are interrelated. And btw I also support to merge the subarticles/Subterms "Primary balance" + "Cyclically-adjusted primary balance" + "Structural budget balance" into the same overall "GB balance" article (leaving the "search terms" as redirects for the "GB balance" article). In regards of what we shall do with the current "Government budget" article, I however recommend that we for now do not merge it with the new "GB balance" article, as the subject of that article potentially is more broad than just to cover the "GB balance" subject. Danish Expert (talk) 17:25, 31 July 2012 (UTC)

Thanks for your support. i will soon implement the move. BTW I did not propose to merge GB into GB balance. I also think that GB is a different subject. If anything, GB should have a short summary section on GB balance with a main template linking to this article here (ie., GB balance).

Perhaps you can later check if I implemented the move with all redirects as intended. Tomeasy _{T C} 19:50, 31 July 2012 (UTC)

I just saw that I cannot do the move myself. we need an admin to help, because the page we want to move to (GB balance) does already exist. Tomeasy _{T C} 20:07, 31 July 2012 (UTC)

The fastest way to get help by an admin to solve the problem, is to nominate the "GB balance" redirect page for a speedy deletion (with the argument: no history is lost upon its deletion as it currently only exists as a redirect page -and we need it deleted in order to rename another article into the same name of the current "redirect name"). And once deleted, we can then move our article into the now available name. I will leave the job for you, to communicate with the admins. If you already filed a standard request for an admin to solve our problem and perform the desired rename, this procedure will also be OK (with the only disadvantage that the time before the problem is solved will be a matter of a few days; instead of a few hours). :-) Danish Expert (talk) 05:02, 1 August 2012 (UTC)

It's been moved, so now we just need to rewrite the lead a little bit to make sense of the new name and clarify the concept. Morphh ^(talk) 14:24, 1 August 2012 (UTC)

Just wrote a new lead. Due to time constraints, I will leave the rest of the work to update/improve the chapters to other editors.:-) Danish Expert (talk) 09:40, 4 August 2012 (UTC)

Suggestion to merge 4 sub-articles into the main article

As part of turning the Government budget balance article into an overall article, covering all sorts of concepts and terms related to the Government budget balance, I today filed a proposal also to completely merge the current sub-articles in this field into the main article. The sub-articles are IMHO so closely related to the main article, that they can easily be integrated into the main article. In fact they are already partly covered. And currently the sub-articles only have a "stub size", which in my opinion doesnt justify they should be covered by seperate spinoff articles. Please let me know if you agree/disagree? The 4 subarticles I propose to merge into the "Government budget balance" main article are:

• Primary deficit
• Structural and cyclical deficit
• Primary balance (statistical term)
• Deficit spending

Danish Expert (talk) 13:09, 4 August 2012 (UTC)

I would not mind for the first 3, but deficit spending seems to be a term much wider in scope than government budgets. This one should probably not be merged. Tomeasy _{T C} 19:38, 6 August 2012 (UTC)

I agree with Tomeasy about Deficit spending, and also that Structural and cyclical deficit not be merged. That article needs to be enlarged; "structural balance" used to be called "full employment balance" (iirc that term & the concept due originally to Beardsley Ruml in order to convince FDR to intentionally deficit-spend in 1937-38) and this (IMHO detrimental) terminological change sowed confusion, whose exploration & clarification would be excessive for this more general article.John Z (talk) 01:36, 22 October 2012 (UTC)

Yeah, merge Primary deficit and Primary balance (statistical term) only. Deficit spending is a fully developed article and is in very good shape compared to Government budget balance, which still needs a lot of work. It might make sense to roll Structural and cyclical deficit into Deficit spending so editors don't duplicate work going forward. Sparkie82 (t•c) 01:43, 5 December 2012 (UTC)

That sounds like a good plan to me. Morphh ^(talk) 02:02, 5 December 2012 (UTC)

Reason why government surplus is not prefered by business although good for government and citizens

If you have a surplus then you can lend it out and make interest. Lending businesses do not want government to have a surplus so that government can not compete with them. In addition if government has a surplus it will have no need to borrow money from them. Even though a government surplus would allow individuals and corporations to pay lower taxes many business based political groups would rather have the income from deficit spending by lending government money on which they can collect interest while complaining about high taxes. The ideal position for government and citizens however is a government surplus these groups want to deny. --Budgetstudiesforum (talk) 10:00, 24 November 2012 (UTC)

Everything in that passage is fundamentally wrong except for the title up to 'business'. A government surplus means the government isn't spending anything it is the equal and direct opposite of fiscal injections (deficits). Clearly a government surplus is bad for everyone who isn't the government because it means they must run down their own surplus, which they run out of, not being currency issuers. There is no 'competing with business' by having the fiscal balance tipped toward a fiscal surplus. This is not money that gets spent it is money not spent. The government doesn't borrow money from business, it supplies money to them. It is the only legal entity in a sovereign monetary economy which can ever supply them with it. Remember when the banks and stock market crashed in 2008? Government refinanced them, and clearly didn't borrow it from that same bankrupt business sector. If the private sector is government's financier this couldn't have happened. The ideal position for government and citizens is one where the private domestic sector is never in deficit, which means the government should be under most circumstances (or that there is a foreign sector surplus, which is non-existent for places like the U.S. and UK). When governments of this type try to run surpluses, the public quickly falls into penury. 86.87.191.180 (talk) 17:46, 21 October 2022 (UTC)

Ricardian equivalence questionable theory

Ricardian equivalence is based on a UK member of parliment. Which is very UK based. It's economic merits are questionable. It's fiscal policy merits are small an only specific to speculation of UK fiscal policy. If anything on a minor basis. — Preceding unsigned comment added by 137.111.13.200 (talk) 04:08, 8 June 2014 (UTC)

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