Question

How will reducing the government budget deficit make future generations better off?  How could reducing the government budget deficit harm future generations?

Answer 1

There are only two ways of cutting a budget deficit. You have to either increase sales, or reduce expenditure. You can increase income on a personal level by getting a raise, finding a better job or working two jobs. On the side, you can also start a business, draw down investment income, or rent out land. In the short term reducing spending is simpler. Many experts, including Starbucks coffees and cable subscriptions, recommend taking out non-essential ones. This even helps if they are seeking support for those with a spending problem. Yet, in the long run, that sales are more sustainable. Evaluate and continually develop your abilities to increase your labor market income.

It is only by raising taxes or growing economic growth that governments will raise revenues. Tax hikes are tricky. They'll hinder the development if they're too extreme. Politically, they often end a politician's career. It can only be done moderately to increase the production. If growth is faster than the ideal range of 2-3 percent, it will create a boom, which leads to a bust.

Cutting spending also has stumbling blocks. State spending is an important part of GDP. When the government cut spending too much it would hinder economic growth. Which contributes to lower profits and likely to a bigger deficit. The best solution is to cut spending on areas that do not create many jobs.