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– Nelson Mandela

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Government Budget and Fiscal Policy

Government Budget and Fiscal Policy

Q Discuss the following question by Thursday and reply to one peer's posting by Saturday (10 points). What are the arguments for and against requiring the U.S. federal budget to be balanced?

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The arguments for requiring the U.S. federal budget to be balanced are amid the long-running rush to balance the U.S. budget, just as rising U.S. debt will eventually lead investors to question the government’s ability to service it, leading to soaring interest rates that will depress private sector investment and the economy. If interest rates rise too quickly, it will be difficult for the government to pay interest on Treasury bonds, leading to defaults or higher inflation.