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Hence, a budget deficit can also lead to a trade deficit, causing a twin deficit. Though the economics guiding which of the two is used to finance the government deficit can get more complicated than what is shown above, the essence of it is that if foreigners' savings pay for the budget deficit, the current account deficit grows. [ 3 ]
Since 2008, the foreign sector surplus and private sector surplus have been offset by a government budget deficit. [ 2 ] [ 3 ] Sectoral analysis is based on the insight that when the government sector has a budget deficit, the non-government sectors (private domestic sector and foreign sector) together must have a surplus, and vice versa.
For example, in 2010 the tax rate that applied to the first $17,000 in taxable income for a couple filing jointly was 10%, while the rate applied to income over $379,150 was 35%. The top marginal tax rate has declined considerably since 1980. For example, the top tax rate was lowered from 70% to 50% in 1980 and reached as low as 28% in 1988.
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A budget surplus means the opposite: in total, the government has removed more money and bonds from private holdings via taxes than it has put back in via spending. Therefore, budget deficits, by definition, are equivalent to adding net financial assets to the private sector, whereas budget surpluses remove financial assets from the private sector.
California has a huge budget problem that could force thorny decisions from Democratic leaders who enjoyed a more than $100 billion surplus just three years ago. Democratic Gov. Gavin Newsom on ...
The overall government budget balance is determined by the sum of the cyclical deficit or surplus and the structural deficit or surplus (refer to chart). Therefore, for example, a cyclical surplus could mask an underlying structural deficit, as the overall budget may appear to be in surplus if the cyclical surplus is greater than the structural ...
For example, in January 2009 the CBO reported that for FY2008, the "on-budget deficit" was $638 billion, offset by an "off-budget surplus" (mainly due to Social Security revenue in excess of payouts) of $183 billion, for a "total deficit" of $455 billion. This latter figure is the one commonly reported in the media.