In the simplest terms, Deficit Spending is when a government's expenditures exceed its revenues during a fiscal period, causing it to run a budget deficit. Most developed countries have been running deficits for years as they try to stimulate their economies and combat the effects of the global recession. The United States has been running deficits since 2002, and currently has one of the highest levels of public debt in the world.Critics of deficit spending argue that it leads to higher levels of government debt and increased inflationary pressures. They also contend that it can crowd out private investment and lead to slower economic growth. Supporters argue that deficits are necessary in times of economic recession, and that they can help boost GDP growth rates and reduce unemployment rates.
