We have heard from Mr. Trump, “Billions and Billions and Billions….” on numerous occasions. He always seems to be a good boy who is taught to speak loudly and show off with billions. However the deprivation of job ratio, unemployment, prejudice within corporate sectors and low salary, all these issues still embark in the states. If tax revenue is $230 billion and the governments outlays are $235 billion then the budget should be worrisome. Cause the figure says the opposite.
What is the real story behind outlaying more than the capacity of tax revenue?
So the major issue that we would like to address is that the government is by far collecting a hell of taxes from the public. But they spent more than what they take. Spending not only on the public but its expenditures are rigorously climbing. The major and minor issues are still out there. Despite getting on the table, and addressing the issues the public faces on a daily basis, the government is collecting taxes with extra margins. What would happen if a situation in which revenue exceeds outlays occurs? As a result, when the government’s expenditures exceed its tax revenue, the budget has a deficit and the national debt is increasing. This scenario is called a budget surplus. The US has been witnessing this problem since 1970 and it has happened nearly four times in US history.
Wide Range Solutions to the Economic problem
Now the real part comes when we are able to solve the problem. There is a wide range of solutions to coup with the exceeding government outlays while the tax revenue is lower. A few of them are mentioned and elaborated below.
The need for Budget Surplus
A budget surplus is when income or receipts exceed outlays or expenditures. The term “savings” is used to describe a budget surplus-type situation with an individual. It’s a situation in which revenue exceeds outlays.
Why Do We Need Automatic Stabilizers?
First of all, what do we know about Automatic Stabilizers?
Automatic stabilizers are defined as the self-operated indicators to mend the economy. The fluctuating economy could be resolved by adopting the feature of Automatic Stabilizers. Automatic Stabilizers are a part of macroeconomics. It resolves or at some level reduces the fluctuations in GDP. They do not need any policymaker or government or any institution to operate.
Fiscal Stimulus Approach
Another approach to the fiscal policy is fiscal stimulus. It’s a widely used one but needs to be executed carefully.
It uses a wide range of approaches within itself like lowering the interest rate, loan assistance and providing budgetary solutions. Fiscal Stimulus should be adopted only if you are capable enough to handle these points. The points are timely, temporary and targeted. If you bypass these three troubles, you could achieve your aim of “if tax revenue is $230 billion and the governments outlays are $235 billion then the budget deficit is $5 billion and government debt will increase by $5 billion”. But in case you don’t bypass then the very same fiscal stimulus that increases an existing government budget deficit could happen.