Deficits Surpluses and Debt The Public Debt Ownership
Deficits, Surpluses, and Debt The Public Debt Ownership of the Public Debt Substantive Issues The Crowding Out Effect Deficits and Surpluses 1990 -2010 Options for the Surpluses Key Terms Previous Slide End Show 18 - 1 Next Slide 18 CHAPTER Deficits, Surpluses, and the Public Debt Copyright Mc. Graw-Hill/Irwin, 2002
DEFICITS, SURPLUSES, AND DEBT Deficits, Surpluses, and Debt The Public Debt Ownership of the Public Debt Substantive Issues The Crowding Out Effect Deficits and Surpluses 1990 -2010 Options for the Surpluses Key Terms Previous Slide End Show 18 - 2 Next Slide Definitions: • Budget Deficit • Budget Surplus • National or Public Debt • U. S. Securities Budget Philosophies • Annually Balanced Budget • Cyclically Balanced Budget • Functional Finance Copyright Mc. Graw-Hill/Irwin, 2002
THE PUBLIC DEBT Facts and Figures: Deficits, Surpluses, and Debt The Public Debt Ownership of the Public Debt Substantive Issues The Crowding Out Effect Deficits and Surpluses 1990 -2010 Options for the Surpluses Key Terms Previous Slide End Show 18 - 3 Next Slide Causes: • Wars • Recessions • Tax Cuts Quantitative Aspects • Debt and GDP • International Comparisons • Interest Charges • Ownership Copyright Mc. Graw-Hill/Irwin, 2002
GLOBAL PERSPECTIVE Deficits, Surpluses, and Debt The Public Debt Ownership of the Public Debt Substantive Issues The Crowding Out Effect Deficits and Surpluses 1990 -2010 Options for the Surpluses Key Terms Previous Slide End Show 18 - 4 Next Slide Public Sector Debt as a percent of GDP, 2000 0 20 40 60 80 100 120 140 Italy Japan Belgium Canada Spain France Germany United States Netherlands Finland Sweden Denmark United Kingdom Australia Copyright Mc. Graw-Hill/Irwin, 2002 Source: Organization for Economic Cooperation and Development
Deficits, Surpluses, and Debt The Public Debt Ownership of the Public Debt Substantive Issues The Crowding Out Effect Deficits and Surpluses 1990 -2010 Options for the Surpluses Key Terms Previous Slide End Show 18 - 5 Next Slide THE PUBLIC DEBT Social Security Considerations • Social Security Trust Fund False Concerns • Bankruptcy • Refinancing • Taxation • Burdening Future Generations Copyright Mc. Graw-Hill/Irwin, 2002
OWNERSHIP OF THE PUBLIC DEBT Deficits, Surpluses, and Debt The Public Debt Ownership of the Public Debt held Other, Including U. S. Banks & Financial Outside the Institutions State & Local Governments Federal Reserve & Federal Reserve Government Agencies 17% 13% Substantive Issues 9% The Crowding Out Effect Deficits and Surpluses 1990 -2010 22% Options for the Surpluses Key Terms Previous Slide End Show 18 - 6 U. S. Government Agencies 28% Foreign Ownership Next Slide U. S. Individuals Copyright Mc. Graw-Hill/Irwin, 2002 11% Debt held By Federal Reserve & Government Agencies
SUBSTANTIVE ISSUES Deficits, Surpluses, and Debt The Public Debt Ownership of the Public Debt Substantive Issues The Crowding Out Effect Deficits and Surpluses 1990 -2010 Options for the Surpluses Key Terms Previous Slide End Show 18 - 7 Next Slide • Income Distribution • Incentives • Foreign-Owned Public Debt • External Public Debt Copyright Mc. Graw-Hill/Irwin, 2002
SUBSTANTIVE ISSUES Deficits, Surpluses, and Debt The Public Debt Ownership of the Public Debt Substantive Issues The Crowding Out Effect Deficits and Surpluses 1990 -2010 Options for the Surpluses Key Terms Previous Slide End Show 18 - 8 Next Slide • Crowding Out and the Stock of Capital • Public Investment • Public-Private Complementarities Copyright Mc. Graw-Hill/Irwin, 2002
THE CROWDING OUT EFFECT 16 Ownership of the Public Debt Substantive Issues The Crowding Out Effect Deficits and Surpluses 1990 -2010 Options for the Surpluses Key Terms Previous Slide End Show 18 - 9 Next Slide Real interest rate (percent) Deficits, Surpluses, and Debt The Public Debt With a Deficit, An Increase in Investment Demand Causes… 14 12 10 8 6 4 2 Crowding Out Effect ID 2 ID 1 0 5 10 15 20 25 30 35 Investment (billions of dollars) Copyright Mc. Graw-Hill/Irwin, 2002 40
Deficits, Surpluses, and Debt DEFICITS AND SURPLUSES 1990 - 2010 $800 Ownership of the Public Debt Substantive Issues The Crowding Out Effect Deficits and Surpluses 1990 -2010 Options for the Surpluses Key Terms Previous Slide End Show 18 - 10 Next Slide Budget Deficits or Surpluses, Billions The Public Debt 700 600 Actual Projected (as of 2001) 500 400 300 200 100 0 -100 -200 -300 1992 1994 1996 1998 Copyright Mc. Graw-Hill/Irwin, 2002 2000 2002 2004 2006 2008 2010 Source: Economic Report of the President, 2001
OPTIONS FOR THE SURPLUSES Deficits, Surpluses, and Debt The Public Debt Ownership of the Public Debt Substantive Issues The Crowding Out Effect Deficits and Surpluses 1990 -2010 Options for the Surpluses Key Terms Previous Slide End Show 18 - 11 Next Slide • Pay Down the Public Debt • Reduce Taxes • Increase Government Expenditures • Bolster the Social Security Trust Fund • Combinations of Policies Copyright Mc. Graw-Hill/Irwin, 2002
OPTIONS FOR THE SURPLUSES Deficits, Surpluses, and Debt The Public Debt Ownership of the Public Debt Substantive Issues The Crowding Out Effect Deficits and Surpluses 1990 -2010 Options for the Surpluses Key Terms Previous Slide End Show 18 - 12 Next Slide • Pay Down the Public Debt • Reduce Taxes • Increase Government CHAPTER Expenditures CONCLUSIONS • Bolster the Social Security Trust Fund • Combinations of Policies Copyright Mc. Graw-Hill/Irwin, 2002
public debt U. S. Securities annually balanced budget cyclically balanced budget functional finance social security trust fund external public debt public investments Copyright Mc. Graw-Hill/Irwin 2002 BACK END
Deficits, Surpluses, and Debt The Public Debt Ownership of the Public Debt t x e N Substantive Issues Disputes Over Macro Theory And Policy The Crowding Out Effect Deficits and Surpluses 1990 -2010 Options for the Surpluses Key Terms Previous Slide End Show 18 - 14 Next Slide Copyright Mc. Graw-Hill/Irwin, 2002 Chapter 19
- Slides: 14