Question

A deficit hawk is a fiscal conservative that insists that there must be spending cuts and revenue increases to halt the growing deficit.

A deficit dove believes that concerns about short-term deficits are less important and attempts to shrink them should not override temporary efforts to foster economic growth. Deficits in the short run to halt downturns in the economy are acceptable.

A deficit owl is an individual who believes that the focus of fiscal policy should be on creating full employment and not on the size of the budget deficit and that we never need to balance the budget.

Prepare

Make a post where you declare your allegiance to one of these three perspectives. If you are leaning toward adopting one perspective, find out what the criticisms of this perspective are.

Post a picture of the deficit perspective you most closely align with (be sure to offer photo credit and cite your source), then explain how you came to that decision. What factors did you consider? What facts/data helped you in your decision?

Then, briefly discuss some of the criticisms to this perspectives and whether or not you find the criticisms to be valid.

Answer 1

The idea presented by the deficit dove is considered to be more valid in comparison to the ideas. Deficit in the short run to halt the downturns in the economy are acceptable. But one important point to consider here is the nature of the expenditure. It is preferable that the government increases its spending in the form of capital expenditure which will lead to increased economic growth in future. This is because capital spending in an economy is always productive as compared to revenue spending. Even though it might cost the government in the short run in the form of increased budget deficit but in the long run it increases economic growth and all the deficit could be recovered. Empirical evidences also show that capital spending along with tax cut leads to economic growth in the long run.

On of the major criticisms of this policy is increased budget deficit in the short run, Though it is true but not a matter of concern as in the long run productive expenditure leads to increased economic growth.