Potential policy solutions for unintended deficits Government budget balance

1 potential policy solutions unintended deficits

1.1 increase taxes or reduce government spending
1.2 changes in tax code
1.3 reduce debt service liability

potential policy solutions unintended deficits
increase taxes or reduce government spending

the government surplus/deficit of struggling european countries according european sovereign debt crisis: italy, cyprus, portugal, spain, greece, united kingdom , ireland against eurozone , united states (2000–2013).

if reduction in structural deficit desired, either revenue must increase, spending must decrease, or both. taxes may increased everyone/every entity across board or lawmakers may decide assign tax burden specific groups of people (higher-income individuals, businesses, etc.) lawmakers may decide cut government spending.

like taxes, decide cut budgets of every government agency/entity same percentage or may decide give greater budget cut specific agencies. many, if not all, of these decisions made lawmakers based on political ideology, popularity electorate, or popularity donors.

changes in tax code

similar increasing taxes, changes can made tax code increases tax revenue. closing tax loopholes , allowing fewer deductions different act of increasing taxes have same effect.

reduce debt service liability

every year, government must pay debt service payments on overall public debt. these payments include principal , interest payments. occasionally, government has opportunity refinance of public debt afford them lower debt service payments. doing allow government cut expenditures without cutting government spending.

suggest balanced budget

a balanced budget practice sees government enforcing payments, procurement of resources done inline realised revenues, such flat or 0 balance maintained. surplus purchases funded through increases in tax.