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Balancing a budget in a recession does not subsequently mean that the state will take in less tax revenue. It also does not necessarily mean that a "large porti
by sunsu 15y ago
Balancing a budget in a recession does not subsequently mean that the state will take in less tax revenue. It also does not necessarily mean that a "large portion of demand" will go away. That would depend entirely on what was cut.
However, consistently running an unbalanced budget will most definitely lead to a "downward spiral".
- brown9-2 15y agoWhat kind of government spending can you cut that does not reduce demand of some kind in another part of the economy? If the answer is "entitlement spending", where do you think the money spent by the government on Social Security/Medicaid/Medicare/welfare/jobs programs/etc goes? Into consumer's hands and right back into the economy.