A Budget Surplus occurs when income exceeds expenditures. This occurs when the government spends less than it brings in and companies earn more than they spend. When the opposite happens, there is a budget deficit.The budget surplus is not always a good thing. There are two reasons for a budget surplus:1- The government is spending less than it brings in (revenue):
This may be a good thing if the government is spending less because it is investing in infrastructure, education, and research & development.2- The government is spending less than it brings in (revenue) because it is redistributing income from the rich to the poor.This may be a bad thing if the government is spending less because it is cutting important programs such as education, infrastructure, and healthcare. In other words, the government is spending less to help those who need it most.What will happen to the economy if the budget surplus goes away?A budget surplus is not the same thing as wealth. A budget surplus is merely the excess of income over expenditures. If the government stops spending money, it will not hurt the economy. In fact, it may be a good thing for the economy. It will reduce the amount of government debt and help bring down interest rates and inflation.How does a budget deficit work?The opposite of a budget surplus is a budget deficit. A budget deficit occurs whenexpenditures exceed income. This occurs when the government spends more than it brings in and companies spend more than they earn.
