The federal government ran a deficit of $3.1 trillion in fiscal year 2020, more than triple...

The federal government ran a deficit of $3.1 trillion in fiscal year 2020, more than triple the deficit for the fiscal year 2019. This year's deficit amounted to 15.2% of GDP, the greatest deficit as a share of the economy since 1945.

Is this budget deficit a serious problem? If it is yes, how would you propose lowering it? If no, then explain why?

Expert Solution

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Budget deficit for 2020 is $3.1 Trillion which is about 15.2% of GDP, Greatest since 1945.

Question: Is this Budget deficit a serious problem?

Note: Assumed the reason for the deficit is pandemic.

Yes. this is a cause of concern. But since it is not the regular event and happens once in history or during the crisis time, We have to manage it by the following methods.

1. Reduce spending on non - essentials, like building a memorial or government funded theme park, the one which doensnt bring any value addition to the health of people.

2. Optimize purchase cost - negotiating for essentials like Hospital equipments, drugs etc.,

3. Invite Public sponsorship for various healthcare activities

4. Since we are being in the era of Fiat Money, Government may infuse more such money into the system

5. Raising funds by Selling bonds and commodities (Gold) or any securities such as liquidating government owned companies

Rahul Sunny answered 1 year ago

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The federal government ran a deficit of $3.1 trillion in fiscal year 2020, more than triple...

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