A government can balance a budget by spending less, borrowing or increasing its income. What are the problems?

A government can balance a budget by spending less, borrowing or increasing its income. What are the problems that could occur in each method of balancing the budget?|||The concept of balancing a budget by borrowing defies the usual meaning of a balanced budget. It is a deficit budget when any borrowing is needed.





National debt of course is assumed to be permanent and increasing, because neither reducing spending nor increasing taxes will win votes. One wins votes by cutting taxes, increasing spending, and of course borrowing from tomorrow, which will be doomed to do the same.





The objective of both taxation and borrowing money are the same. They both remove surplus money from the economy so that inflation does not get out of control driven by government spending. There will also be times when the economy acts as though it has too little money, or that money is circulating too slowly to drive the economy.


In those situations printing money to buy back some of the national debt can in effect undue the effect of selling too many bonds. Odd as it may seem, we find the process of printing money and buying back debt somehow threatening while we see selling bonds and canceling the money less threatening.





We as individual taxpayers object to paying taxes to protect the value of the currency, even if we know that the effect of leaving that money in circulation may cost us more. We vehemently object to having spending cutback when we are being paid from that spending.





And we the objecting voters will vote for anyone who will give us more spending and less taxation.|||1. Borrowing is NOT balancing the budget. By DEFINITION, a balanced budget means no borrowing is necessary.


2. A government CAN'T increase its income any more than YOU can just decide to increase yours. The money has to come from SOMEWHERE.


3. Governments COULD cut spending, but the NEVER do. That is why nearly EVERYONE in office needs to be replaced.|||Spending less: Everyone crys when you spend less on their program. Heaven forbid you should cut welfare benefits.


Borrowing: You are placing the debt on future generations and the cost of this method is BY FAR the highest. In general, for every $1 billion borrowed, $2 billion is spent on interest.


Increasing Income: This is ONLY done by increaseing YOUR taxes. Do you see the problem with that immediately?