e Washington to 1992, the nation's yearly deficits finally added up to a $1 trillion national debt. With the care-free spending policies of the 1980s, the nation acquired a debt of $2 trillion just four years later; $3 trillion in 1990; and $4 trillion in 1992. In fiscal year 1993, the national debt stood at $4.3 trillion (Black, 1993, pp. 10-12).
When economists talk about "balancing the federal budget," they usually are referring to balancing one year's deficit in order not to contribute any further to the burgeoning national debt. In order to reduce the debt, the federal government would not only have to balance the deficit, but would have to make a surplus that could be invested into paying off the debt. The federal government today, however, would be delighted simply to balance the deficit.
There are three general categories of spending sources in the federal budget that may be subject to cuts. In addition to raising the income of the federal government through increasing taxes, the United States has three choices of reducing the deficit through spending reductions. One choice is to trim the budget by reducing discretionary spending, a catchall category for what Congress spends every year on a wide array of services and programs, including national parks, medical research, educational assistance, and disaster relief. A second choice is to close the budget gap by cutting the defense budget. And a third choice i
...