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New Delhi, The Centre's <keyword id="6365485" type="General" weightage="20" keywordseo="fiscal-deficit" source="Orion">fiscal deficit</keyword> in the first five months of 2023-24 touched 36 per cent of the full-year target, government data showed on Friday. In absolute terms, the fiscal deficit -- the gap between expenditure and revenue -- was Rs 6.42 lakh crore as of August-end, according to the data released by the Controller General of Accounts (CGA). The deficit stood at 32.6 per cent of the <keyword id="578082" type="General" weightage="20" keywordseo="budget-estimates" source="Orion">Budget Estimates</keyword> (BE) in the corresponding period of the financial year 2022-23. In the Union Budget, the government projected to bring down the fiscal deficit to 5.9 per cent of the gross domestic product (GDP) in the current 2023-24 financial year. The fiscal deficit was 6.4 per cent of the GDP in 2022-23 against the earlier estimate of 6.71 per cent. Unveiling the revenue-expenditure data of the central government for the April-August period of 2023-24, CGA said the net tax revenue was Rs 8.03 lakh crore, or 34.5 per cent, of the BE for the current fiscal. The net tax revenue collection was 36.2 per cent at August-end 2022. The central government's total expenditure in the first five months stood at Rs 16.71 lakh crore, or 37.1 per cent, of the BE. The expenditure was 35.2 per cent of the BE a year ago. Of the total expenditure, Rs 12.97 lakh crore was on the revenue account and Rs 3.73 lakh crore towards the capital account. Fiscal deficit is the difference between the total expenditure and revenue of the government. It is an indication of the total borrowings that are needed by the government.

Centre's fiscal deficit at Aug-end touches 36% of full-year target: CGA

<ul class="summary-list"><li>The US budget <keyword id="6420764" type="UNKNOWN" weightage="60" keywordseo="deficit">deficit</keyword> widened to a record $1.7 trillion in the first half of the fiscal year.</li><li>The government spent $927 billion in March, with much of the funding linked to Democrats' stimulus.</li><li>White House and Fed officials have said low interest rates ensure the debt doesn't present an immediate danger.</li></ul>The US budget deficit climbed to a record $1.7 trillion last month after stimulus spending in March lifted the shortfall.The government spent roughly $927 billion as the first half of the fiscal year came to a close, the <a href="https://fiscal.treasury.gov/files/reports-statements/mts/mts0321.pdf">Treasury Department</a> said Monday. Much of the surge was linked to Democrats' $1.9 trillion stimulus package, which included $1,400 direct payments and expanded unemployment benefits that reached households in a matter of days.Tax revenues only amounted to about $268 billion, leading the month's deficit to reach $660 billion. That compares to a deficit of $119 billion in March 2020, when the <keyword id="34412" type="ORGANIZATION" weightage="100" keywordseo="economy">economy</keyword> was first frozen by the pandemic. The deficit for fiscal 2021 is now more than double what it was in the year-ago period.The federal budget gap widened significantly last year as the health crisis prompted historic fiscal spending on stimulus and safety measures. And while vaccination has revitalized the economic recovery, additional relief packages passed by President Donald Trump late last year and President Joe Biden in March extended the spending spree.The Treasury's update comes as the federal debt - the amount of money owed by the US government - already hovers around levels not seen since the 1940s. The debt reached 129% of US gross domestic product in the fourth quarter of 2020, according to the US Office of Management and Budget. That level has prompted some to call for a reversal of recent aid measures and a return to more austere spending activity."While much of the deficit spending during this crisis was justified, the latest package was arguably twice as large as it needed to be and not as well targeted as the other relief packages," Maya MacGuineas, president of the <keyword id="3719100" type="ORGANIZATION" weightage="60" keywordseo="committee-for-a-responsible-federal-budget">Committee for a Responsible Federal Budget</keyword>, said in a <a href="https://www.crfb.org/press-releases/cbo-reports-658-billion-deficit-march">statement</a>, adding lawmakers now need to "resist old habits of adding to the deficit."Yet officials guiding the country through the pandemic recession and nascent recovery aren't in such a rush. The federal debt pile eventually needs to be put on a more sustainable path, but recovering from the coronavirus pandemic is the government's top priority, Treasury Secretary <keyword id="116249" type="PERSON" weightage="60" keywordseo="Janet-Yellen">Janet Yellen</keyword> said during her January confirmation hearing. Historically low interest rates ensure the debt can be managed at least until the economy is on stable footing, she added."To avoid doing what we need to do now to address the pandemic and the economic damage that it is causing would likely leave us in a worse place," Yellen said.Federal Reserve Chair <keyword id="1727754" type="PERSON" weightage="60" keywordseo="Jerome-Powell">Jerome Powell</keyword> made similar remarks in March. There will come a time where government spending will have to be more sustainable, he said, "<a href="https://www.businessinsider.com/economic-recovery-priority-federal-debt-concerns-federal-reserve-jerome-powell-2021-3">but that time is not now</a>."The ballooning deficit hasn't stopped Biden from pushing for more spending. The president <a href="https://www.businessinsider.com/biden-2-trillion-infrastructure-plan-roads-bridges-broadband-power-2021-3">proposed a $2.3 trillion infrastructure plan</a> last month that includes funds for nationwide broadband, affordable housing, and the renovation of roads and bridges. It is the first portion of a two-part package that will <a href="https://www.businessinsider.com/biden-infrastructure-bill-package-4-trillion-with-tax-hikes-2021-3">reportedly cost up to $4 trillion</a>.The White House has also pitched <a href="https://www.businessinsider.com/janet-yellen-corporate-tax-global-minimum-overhaul-oecd-treasury-2021-3">a collection of tax hikes</a> to offset the additional spending. Yet Republicans have <a href="https://www.businessinsider.com/mcconnell-says-gop-wont-support-infrastructure-plan-2021-4">fiercely opposed such increases</a>, setting up a partisan battle over Biden's spending plans and the federal debt as a whole.

The US deficit soared to a record $1.7 trillion as the government doled out new stimulus

An excerpt from a post by Cardiff Garcia at FT Alphaville: <a href="http://ftalphaville.ft.com/2013/08/09/1598072/shrinking-us-deficit-update-and-a-new-debt-ceiling-projection/">Shrinking US deficit update, and a new debt ceiling projection</a>
From a note this morning by economists at Barclays:
The US federal <keyword id="6358021" type="PERSON" weightage="60" keywordseo="budget">budget</keyword> <keyword id="6420764" type="COMPANY" weightage="60" keywordseo="deficit">deficit</keyword> has been improving at a dramatic pace in recent months. As a percent of GDP, the deficit peaked at 10.2% of GDP in the four quarters ending in Q4 09; over the past four quarters, it has totaled 4.2% of GDP, down from 7.7% one year earlier.
On Monday, the Treasury will <a href="http://www.fms.treas.gov/mts/index.html">release the monthly update</a> of the Federal Government deficit for July. The report is expected to show that the deficit for the current calendar year will be close to the Congressional Budget Office's (CBO) projections in May. The CBO already released their <a href="http://www.cbo.gov/publication/44495">Monthly Budget Review for July 2013</a>:
The federal government incurred a deficit of $96 billion in July 2013, CBO estimates, $27 billion more than the shortfall in the same month last year. But that comparison is distorted by quirks of the calendar: Because July 1, 2012, fell on a Sunday, certain payments that ordinarily would have been made in July were made earlier, reducing outlays in July 2012 by about $36 billion. No such payment shift occurred in July 2013. Without that shift in the timing of payments in 2012, the deficit for July 2013 would have been $10 billion less than the deficit for July 2012.
Watch out for reports that don't mention the timing issue!
For the current fiscal year (ends September 30th), the CBO is projecting a deficit of 4.0%. This is down sharply from 7.0% last year. And the CBO expects the deficit to fall to 2.1% of GDP in 2015.
<div class="image-container click-to-enlarge"><div class="image"><a title_source="Calculated Risk" title_caption="" class="zoomin" href="http://static4.businessinsider.com/image/520569b169bedde06a000022-960/cboupdate.jpg"></a><a href="http://www.calculatedriskblog.com/">Calculated Risk</a></div></div> Click on graph for larger image. This graph, based on the CBO's May projections, shows the actual (purple) budget deficit each year as a percent of GDP, and an estimate for the next ten years based on estimates from the CBO.
After 2015, the deficit will start to increase again according to the CBO, but as I've noted before, we really don't want to reduce the deficit much faster than this path over the next few years, because that will be too much of a drag on the economy.

The Deficit Is Shrinking

India's <keyword id="183320" type="UNKNOWN" weightage="100" keywordseo="current-account-deficit">current account deficit</keyword> (CAD) narrowed to 1.7% of <keyword id="35050" type="CITY" weightage="80" keywordseo="gdp">GDP</keyword> in the April-June quarter of FY2014-15. This was mainly due to a reduction in <keyword id="113688" type="UNKNOWN" weightage="100" keywordseo="trade-deficit">trade deficit</keyword> and fall in gold imports. 
 "The lower CAD was primarily on account of a contraction in the trade deficit contributed by both a rise in exports and a decline in imports," <keyword id="30067" type="ORGANIZATION" weightage="80" keywordseo="RBI">RBI</keyword> said. 
 
CAD narrowed $7.8 billion (1.7% of GDP) from $21.8 billion (4.8% of GDP) in the year-ago period. 
 
There was a huge fall of 57.2% in gold imports, amounting to $7 billion, which is lower than $16.5 billion in the April-June quarter of FY2013-14, RBI said. 
 
The trade deficit decreased by 31.4% to $34.6 billion in Q1 of FY2014-15 as compared to $50.5 billion in Q1 of FY2013-14. 
 
The CAD had reached $87.8 billion in FY2012-13 due to a sharp increase in gold imports. 
 
According to the Balance of Payments (BoP) data, on net basis, both foreign direct investment and portfolio investment recorded inflows in the first quarter of 2014-15. 
 
"There was a net accretion of $11.2 billion to India's foreign exchange reserves in the first quarter of 2014-15 as against a draw down of $0.3 billion in Q1 of 2013-14," RBI said.

CAD Dips To 1.7% In Q1 As Trade Deficit Declines

<div class="image-container" style="width:600px"><div class="image"></div><a href="http://www.flickr.com/photos/sufw/4670973231/">SUFW, Flickr</a></div>
It almost looked like <a href="http://www.businessinsider.com/paul-krugman-on-the-us-economy-2013-2">the deficit wars were over</a>.
The hawks who insisted that we must make <keyword id="6420764" type="COMPANY" weightage="60" keywordseo="deficit">deficit</keyword> reduction a major priority seemingly retreated, as the growing economy took the wind out of their sails.
But it looks like they're gathering for one more go at a grand bargain.
NYT's Thomas Friedman has a column <a href="http://www.nytimes.com/2013/02/17/opinion/sunday/friedman-how-to-unparalyze-us.html?hp&amp;_r=0">urging Obama</a> to give one more shot at a "grand bargain" that would involve lower future spending and higher taxes. Friedman believes that this will unlock corporate confidence and spending.
<a href="http://www.politico.com/story/2013/02/paul-krugman-economics-deny-deny-deny-87722.html">MSNBC's Joe Scarborough</a> continues his crusade for deficit reduction, calling Krugman a debt denialist.
And WSJ reports that today, Simpson and Bowles, the two faces of deficit hawkism, <a href="http://online.wsj.com/article/SB10001424127887323949404578312900950865818.html">will unveil a new plan (their 4th)</a> providing specifics on how money can be saved on closing loopholes and reducing healthcare expenses.
So the deficit wars aren't over yet.
Despite a virtually nil possibility that DC is going to do anything substantial on the deficit, the hawks and the grand bargaineers are giving it one last go.

Here Come The Last, Dying Gasps Of The Deficit Hawks

<table class="image-container float_right" width="200"><tr><td><div class="image"></div>Wikimedia Commons</td></tr></table>Ezra Klein of Wonkblog (the best digital section of the Washington Post) just sent out <a href="https://twitter.com/ezraklein">a bunch of tweets</a> that might be described as "9 inconvenient truths about the <keyword id="6420764" type="COMPANY" weightage="60" keywordseo="deficit">deficit</keyword>."
Mostly, the tweets concern the religious status that discussions about the deficit have attained in this country--in which any proposal that is packaged as a deficit-reduction proposal is given a free pass from analysis, despite the fact that many of them are idiotic. (And, worse, may actually increase the deficit).
Klein is perceived as "left-wing," so his tweets will no doubt be instantly dismissed as partisan lobbying.
But they're true:
1. A few thoughts on deficits, inspired by <a href="https://twitter.com/Neil_Irwin" class="twitter-atreply pretty-link"><s>@</s>neil_irwin</a>'s post on Krugman vs. <a href="https://twitter.com/JoeNBC" class="twitter-atreply pretty-link"><s>@</s>JoeNBC</a>: <a href="http://t.co/hvWjFKSv" target="_blank" title="http://www.washingtonpost.com/blogs/wonkblog/wp/2013/01/31/joe-scarborough-paul-krugman-and-the-economist-pundit-divide-on-debt-and-deficits/" class="twitter-timeline-link" data-expanded-url="http://www.washingtonpost.com/blogs/wonkblog/wp/2013/01/31/joe-scarborough-paul-krugman-and-the-economist-pundit-divide-on-debt-and-deficits/">http://www.washingtonpost.com/blogs/wonkblog/wp/2013/01/31/joe-scarborough-paul-krugman-and-the-economist-pundit-divide-on-debt-and-deficits/ …</a>
2. Claims about deficits in Washington -- so long as they're pro-deficit reduction -- get much less scrutiny than claims about other issues
3. For instance, reporters are allowed to root openly for deficit reduction in a way they can't for, say, universal health care.
4. Policies promoted under the guise of deficit reduction get less scrutiny than those same policies proposed on their own.
5. The biggest problem with the budget debate is people treat deficits as a moral question rather than an economic one.
6. Japan and Britain's low borrowing costs, nonexistent bond crises and rising debt-to-GDP are important context for this discussion.
7. There are few examples of a country getting debt-to-GDP down without getting growth up. Growth is always key.
8. Long-term deficits do matter, in large part for risk aversion and policy smoothing reasons. But they're not near our main threat
9. Manipulating a spreadsheet, which is how most budget proposals work, does not solve our debt problem, which is a health reform problem
<a href="https://twitter.com/ezraklein">You can follow Ezra Klein here &gt;</a>
<div class="context"> </div>

9 Inconvenient Truths About The Deficit

<table class="image-container float_right" width="200"><tr><td><div class="image"></div>NBC</td></tr></table>Here is the latest datapoint in a growing trend that support for "austerity" is crumbling.
<a href="http://www.politico.com/story/2013/04/democrats-debt-crisis-90717.html?hp=f2">Ben White and Tarini Pariti at Politico </a> have a good story on how Democrats are increasingly comfortable saying that austerity is pointless and that you can't fix the <keyword id="6420764" type="COMPANY" weightage="60" keywordseo="deficit">deficit</keyword> by focusing on spending.
... aided by a pile of recent data suggesting the deficit is already shrinking significantly and current spending cuts are slowing the economy, more Democrats such as Virginia Sen. Tim Kaine and Maryland Rep. Chris Van Hollen are coming around to the point of view that fiscal austerity, in all its forms, is more the problem than the solution.
This group got a huge boost this month with the very public demolition of a sacred text of the austerity movement, the 2010 paper by a pair of Harvard professors arguing that once debt exceeds 90 percent of a country’s gross domestic product, it crushes economic growth.
Turns out that’s not what the research really showed. The original findings were skewed by a spreadsheet error, among other mistakes, and it’s helping shift the manner in which even middle-of-the-road Democrats talk about debt and deficits.
“Trying to just land on the debt too quickly would really harm the economy; I’m convinced of that,” Kaine, hardly a wild-eyed liberal, said in an interview. “Jobs and growth should be No. 1. Economic growth is the best anti-deficit strategy.”
You might wonder what, exactly, is the big deal here. After all, Democrats haven't been the ones pushing for spending cuts. Republicans have. But most of the time, Democrats have ceded the general point to Republicans that debt is a major problem, and that in some form or another, fiscal policy should focus on reducing that debt. The realization that growth is how you close the deficit and that austerity (because it saps growth) is counterproductive allows Democrats to form a counter-argument that doesn't cede to the GOP's premise. And that in itself is an important change in the debate.
Make no mistake that the data supports this concept.
One of our favorite charts shows the unemployment rate vs. the deficit as a percentage of GDP. For decades, the unemployment rate has been a great predictor of where the deficit is. 
 
Between the Reinhart/Rogoff Excel debacle, and the crappy growth in countries that are focused on "fiscal consolidation" (The Eurozone, the U.K., and to some extent the U.S.), it's just getting harder and harder for anyone to say with a straight face that the priority should be spending cuts.

A Democratic Senator From Virginia Knows The Best Anti-Deficit Strategy There Is

When it comes to projecting the <keyword id="6420764" type="COMPANY" weightage="60" keywordseo="deficit">deficit</keyword> (or anything, really) forecasters have a tendency to overweight what's happening right at the time they're making the forecast.
So for example, during the late 90s, the CBO imagined ongoing surplus, and the eventual end of the national debt.
Now a phrase you hear a lot is "trillion dollar deficits as far as the eye can see."
But some of the best economists are predicting a rapid diminishing of the deficit.
In his 10 Questions For 2013 note, Goldman's Jan Hatzius wrote:
By 2015, we expect the federal deficit to be down to $500bn, or just under 3% of GDP. If this forecast is correct, concerns about the federal deficit are likely to diminish over the next few years.
Why will the deficit fall in half like this? <a href="http://www.businessinsider.com/closing-the-deficit-is-painless-2012-12">Because of what we've been writing about a lot, lately</a>: Deficits aren't about spending and taxes. They're about growth or lack thereof. For decades deficits as a % of GDP have been closely correlated with economic improvement. 
This chart of deficits as a % of GDP (red line) vs. the unemployment rate (blue line) is uncanny, holding tight across multiple fiscal regimes.

<a href="http://www.calculatedriskblog.com/2013/01/the-futures-so-bright.html">Bill McBride of Calculated Risk</a> put together a deficit projection that's pretty closely in line with Hatzius'. If it plays out, America will be shocked.
<div class="image-container click-to-enlarge" style="width:598px"><div class="image"><a title_source="Calculated Risk" title_caption="" class="zoomin" href="http://static2.businessinsider.com/image/50fbcd61eab8ea4434000006-960/screen shot 2013-01-20 at 5.48.24 am.png"></a></div><a href="http://www.calculatedriskblog.com/2013/01/the-futures-so-bright.html">Calculated Risk</a></div>

America Will Be Shocked When This Deficit Chart Comes True

Tweaking taxes and spending might be able to alter the size of the <keyword id="6420764" type="COMPANY" weightage="60" keywordseo="deficit">deficit</keyword> at the margins, <a href="http://www.businessinsider.com/closing-the-deficit-is-painless-2012-12">but as we've been talking about lately, today's massive deficit is largely the result of the weak economy</a>.
The reason the deficit has swollen is not because of some big entitlement/big government crisis, but because unemployment has surged.
The deficit will get much smaller as unemployment continues to drop.
So it's cool to see more stuff like this from mainstream pundits, like <a href="http://www.thedailybeast.com/articles/2013/01/14/the-deficit-s-taking-care-of-itself.html">David Frum</a>:
<table class="image-container" width="200"><tr><td><div class="image"></div>Daily Beast</td></tr></table>
In the post, Frum notes that the deficit is down 9 percent from last year, mostly due to the improving economy.
<a href="http://www.businessinsider.com/the-california-budget-surplus-2013-1">The news last week that California is coming back</a> is also a major revelation to people. It reveals that deficits aren't this huge sign of a structural problem, but just what you expect to see in a major downturn.
And now people are talking about the national budget shrinking faster than expected.
Here's Goldman's Jan Hatzius, from his 10 Questions for 2013 note:
As the private sector balance sheet adjustment comes closer to completion, we expect the government deficit to diminish gradually; the fiscal adjustment shown in Exhibit 3 will push in the same direction. By 2015, we expect the federal deficit to be down to $500bn, or just under 3% of GDP. If this forecast is correct, concerns about the federal deficit are likely to diminish over the next few years.
Deficit fears are on the downslope. The only way we can screw it up is by cutting spending too soon!

People Are Really Starting To Get It About The Deficit

Mumbai, India's <keyword id="183320" type="General" weightage="20" keywordseo="current-account-deficit" source="Orion">current account deficit</keyword>, a key indicator of the country's external sector, declined to USD 18.2 billion or 2.2 per cent of the GDP in the December quarter of the current fiscal. The decline was mainly due to narrowing of merchandise trade deficit, according to data released by the Reserve Bank of India (<keyword id="30067" type="General" weightage="20" keywordseo="rbi" source="Orion">RBI</keyword>) on Friday. The Current Account Deficit (CAD) was USD 30.9 billion or 3.7 per cent of the GDP in the second quarter of 2022-23 and at USD 22.2 billion or 2.7 per cent of the GDP in the December quarter of 2021-22. "Underlying the lower current account deficit in Q3:2022-23 was a narrowing of merchandise trade deficit to USD 72.7 billion from USD 78.3 billion in Q2:2022-23, coupled with robust services and private transfer receipts," RBI said. Services exports reported a growth of 24.5 per cent on a year-on-year (y-o-y) basis on the back of rising exports of software, business and travel services. Net services receipts increased both sequentially and on a year-on-year basis. In the December quarter, net foreign direct investment decreased to USD 2.1 billion from USD 4.6 billion in the year-ago period. Net foreign portfolio investment recorded inflows of USD 4.6 billion in the December quarter as against an outflow of USD 5.8 billion in the third quarter of 2021-22. RBI said net outgo from the primary income account, mainly reflecting investment income payments, increased to USD 12.7 billion from USD 11.5 billion in the year-ago period. Private transfer receipts, mainly representing remittances by Indians employed overseas, amounted to USD 30.8 billion in the December quarter, an increase of 31.7 per cent from their level a year ago. Non-resident deposits recorded net inflows of USD 2.6 billion in the third quarter of the current fiscal as compared to net inflows of USD 1.3 billion in the year-ago period. According to <keyword id="153247" type="General" weightage="20" keywordseo="rbi-data" source="Orion">RBI data</keyword>, India recorded a current account deficit of 2.7 per cent of GDP during April-December 2022 period as compared to a deficit of 1.1 per cent during April-December 2021 period.

Current Account Deficit narrows to 2.2% of GDP in Q3: RBI data

<ul class="summary-list"><li>A <keyword id="6420764" type="UNKNOWN" weightage="60" keywordseo="deficit" source="Orion">deficit</keyword> is the shortfall between two measurements, such as earnings and spending.</li><li>When the government spends more than it takes in as revenue, that creates a deficit.</li><li>Not all deficits are bad, even though they can accumulate to create debt.</li></ul>A deficit can be any type of negative gap between two benchmarks. A basketball team could have a deficit of 10 points if they're down 80-70 in the fourth quarter, or you could have a personal budget deficit of $1,000 if you're bringing home $5,000 per month but spending $6,000. Oftentimes, however, the term deficit applies to governments, such as with trade deficits between two countries or budget deficits when spending outpaces tax and other revenue sources.While a deficit implies a shortfall, you shouldn't assume that all deficits are bad or that a large deficit is automatically worse than a small deficit. Much depends on the context. And, when referring to government deficits, politics can play a role in terms of how people view the impact of deficits. <h2>Understanding how deficits work </h2>Deficits comprise two distinct measures, with one being the baseline number you're trying to reach and another being the current amount that's below that baseline. And deficits can be personal, corporate, or even governmental in nature.For example, when spending outpaces earnings, that creates a deficit. A company might earn $1 million in revenue per year, but if they're spending $2 million annually on salaries, office space, software, etc., then they'll have a $1 million deficit. So, they'll need to come up with a way to cover that shortfall, whether that's taking on a loan or burning through savings. That said, this deficit might be part of a company's growth strategy, as ramping up spending could be needed to establish the company so that it's viable long-term. Then there are government deficits, which work a bit differently, especially at the federal level. In general, there are two primary types of deficits to know about: budget deficits and trade deficits, which will be covered later. And as mentioned before, deficits aren't always necessarily bad — depending on who you ask. "Absence of deficits could concern the average person more than deficits themselves. This is because government deficit spending is typically employed in response to a weakening <keyword id="11893570" type="UNKNOWN" weightage="60" keywordseo="economy" source="Orion">economy</keyword>," says <a href="https://www.adelphi.edu/faculty/profiles/profile.php?PID=0079" target="_blank" rel="noopener">Mariano Torras</a>, Ph.D., Chair, Department of Finance and Economics at Adelphi University.Deficits are typically measured over distinct periods, such as quarterly or annually. Deficits create debt, but debt is a measure of what's owed at a specific point in time based on the accumulation of deficits, Torras adds.The federal government not only has far more access generally to borrow money to cover deficits, but it can also print money to close any gaps. That's not to say that the government will definitely print more to spend as much as it wants, but it essentially gives the government more leeway to spend than an individual could. Plus, the government has more levers to pull to affect the impact of deficits, such as raising taxes to shrink deficits.Note: The federal government has the ability to print money to shrink deficits. Even if this capability is rarely used, the option exists.<h2>Types of government deficits </h2>Two of the most common types of government deficits include budget deficits and trade deficits.<h3>Budget deficits </h3>A budget deficit occurs when a government spends more than it receives, primarily from taxes. This can occur at various levels of government, though some non-federal governments have rules that aim to prevent deficits, such as balanced budget amendments at the state level. In theory, that would leave state governments without a deficit or surplus, but projections might be off, or the rules might not be strict enough to avoid deficits. <h3>Trade deficits</h3>With trade deficits, a country in deficit imports more goods and services than it exports to another country. "Most economists believe that the most important thing is that trade deficits or surpluses should not be too large. But there are some — we call them neo-mercantilists — who believe that exporting countries are stronger than importing countries. I agree with the first but also do not entirely disagree with the second," says Torras.Note: Trade deficits aren't necessarily about winning or losing. Much depends on specifics like the size of the deficit and why it might exist, such as to feed consumer demand.<h3>Causes </h3>Deficits are caused by spending more than what you take in, or by generating less than a designated benchmark. Some causes of deficits include the following scenarios:<ul><li>Purposeful deficits: In some cases, those who get into a deficit do so willingly. For example, in recent years, when the federal government sets its annual budget, it knowingly projects the annual deficit based on spending intentions outpacing projected revenue. </li><li>Unintentional deficits: Sometimes a government or company gets into a deficit (or a larger deficit than intended) due to unexpectedly spending more than anticipated or by collecting less revenue than planned. For example, a recession could cause tax revenues to plummet, so even if the government planned to spend less than it taxed, that might not always pan out. That's because factors such as layoffs and pay cuts can lead to less income tax collections, and stock market drops can reduce capital gains taxes.</li><li>Lower production: Deficits can also be caused by simply not having or producing as much as someone else, such as in the case of a points deficit in sports. Or, a government could have a trade deficit with another country if it exports more than it imports. </li></ul><h2>Real-world example of a deficit </h2>In 2020, ​​the US exported $164.9 billion to China and imported $450.4 billion. So, the 2020 US trade deficit with China totaled $285.5 billion, as it's the difference between the imports and exports. Trade deficits between countries can sometimes take on more political weight, such as when the Trump administration instituted tariffs in an attempt to try to shrink the trade deficit between the US and China, among other trade partners. In response, however, countries like China placed tariffs of their own on US exports, making it harder to shrink the trade deficit.<h2>The financial takeaway</h2>Overall, deficits represent shortfalls, but that's not always a bad thing. Owing money due to a deficit does matter, but it could be a purposeful strategy, such as if a company is in growth mode and needs to spend a lot to grow market share before it can become profitable. For the government, deficits can also potentially be positive. During a down economic period, for example, a government deficit could inject spending into the economy to turn things around. A trade deficit also isn't necessarily worse than a surplus, especially if imports enable a country to gain much needed resources.

Understanding deficits — when spending outpaces revenue for a company or government

Obama just gave a speech about the whole debt ceiling, government shutdown fight.
And one of the points he made is that fight isn't actually about the <keyword id="6420764" type="COMPANY" weightage="60" keywordseo="deficit">deficit</keyword>, which has fallen dramatically lately.
And that's true, the deficit has fallen dramatically. The GOP response to this is that the only reason the budget has fallen is because of spending cuts extracted during previous fiscal fights.
But this isn't true! And here's the chart to prove it.
This chart shows the deficit as a percentage of <keyword id="35050" type="CITY" weightage="60" keywordseo="gdp">GDP</keyword> (red line) vs. the unemployment rate (blue line).
Since 1980, the chart is clear: The deficit is a function almost entirely of the economy. When the economy improves, and unemployment goes down, the deficit improves. When the economy worsens, the deficit widens. That's what's made the deficit come down.
There's no benefit to the economy or the deficit from getting into fights over the debt ceiling
<div class="KonaFilter image-container display-table"><div><div class="image on-image"><a href="https://research.stlouisfed.org/fred2/graph/?id=FYFSD">FRED</a></div></div></div>

You Searched For "deficit" and got 12 results

Centre's fiscal deficit at Aug-end touches 36% of full-year target: CGA

PTI

The US deficit soared to a record $1.7 trillion as the government doled out new stimulus

Ben Winck

The Deficit Is Shrinking

Calculated Risk

CAD Dips To 1.7% In Q1 As Trade Deficit Declines

BI India Bureau

Here Come The Last, Dying Gasps Of The Deficit Hawks

Joe Weisenthal

9 Inconvenient Truths About The Deficit

Henry Blodget

A Democratic Senator From Virginia Knows The Best Anti-Deficit Strategy There Is

Joe Weisenthal

America Will Be Shocked When This Deficit Chart Comes True

Joe Weisenthal

People Are Really Starting To Get It About The Deficit

Joe Weisenthal

Current Account Deficit narrows to 2.2% of GDP in Q3: RBI data

PTI

Understanding deficits — when spending outpaces revenue for a company or government

Jake Safane

Here's The Chart That Destroys What Republicans Are Saying About The Deficit

Joe Weisenthal

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