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    Deficit spending, debt and interest expense

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    1. Suppose the federal government balanced the budget and no longer ran a deficit. Despite this action, interest on the federal debt is still substantial. As a public finance topic, comment on this statement.

    2. Analyze and explain on the trend of federal government expenditures and in your opinion, what action(s) if possible should be taken to decrease the level government spending?

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    Step 1:

    If the Federal government balanced the budget and no longer ran a deficit the interest on federal debt is still substantial. The interest expense is on outstanding debts and includes certificates of indebtedness, bonds and notes issued in the US and abroad. In addition, there are savings bond, government account series, state and government series, and US Treasure notes and bonds. In several cases the government has to pay premiums on bills, notes and bonds. During the recent years the Federal Government has been incurring the largest deficits since the World War and the federal debt held by the public has increased. It crossed the $9 trillion mark at the close of 2010 this debt was 62 percent of ...

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    This posting gives you a step-by-step explanation of Deficit spending . The response also contains the sources used.