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The last balanced federal budget was in fiscal 1969, at the height of the Vietnam War. Despite huge military outlays, Lyndon Johnson managed to balance his swan-song budget by increasing taxes enough to pay for spending.
Source Of The Deficit
That achievement was quickly reversed under Richard Nixon and his successor, Gerald Ford. The Nixon-Ford era saw a major shift in spending priorities away from defense and into domestic programs (this didn't happen in the sixties under Johnson, as is sometimes asserted). But it also saw major reductions in taxes--largely from expanded corporate loopholes. As a result, the annual deficit jumped to 2.8 percent of the gross domestic product (GDP) by the time President Ford left office in 1977. (Even so, the total national debt fell slightly as a share of the growing GDP.)
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Here an article written in the year 2000. Isn't it fun to compare what was predicted and what actually happened? The best laid plans of mice and men ........
http://www.washingtonpost.com/wp-srv/politics/special/budget/budget.htm
Why It Matters
The effects of nearly three decades of deficit spending are certainly easy to feel, even if citizens don't see the connection between the federal budget and their own.
When the government spends more than it takes in, it borrows money to make up the difference. Government borrowing raises interest rates, increasing the cost of student loans, car payments and mortgages. It also makes it harder for businesses to borrow money to expand.
Cutting government spending has consequences, too. Many people depend on government services, such as the giant Medicaid and Medicare health programs. And many businesses depend on government contracts. Cutting taxes, on the other hand, may increase government red ink, but it also increases the amount people have to spend, boosting the economy ? which ultimately fills the federal coffers.
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With all the cutting, increasing and spending to stay ahead of the wolf who's to know what's really best for the future?