BALANCING THE BUDGET

When government or a government agency spends an amount equal to the amount they take in, they are said to have a balanced budget. When the government or a government agency spends more than they take in, they are said to have a deficit. To resolve a deficit budget,a government or a government agency can 1)increase taxes, 2)borrow by issuing bonds, 3)cut spending or 4) print more money.

If one were to assume that the budget is an honest statement of the amount needed to run the government or a government agency, the pragmatic way to balance the budget would be to raise taxes.

If the majority rejects raising the taxes, a cut in spending may be the answer. The question "What to cut" then becomes the problem.

Step 1 would be to review the new expenditures proposed and eliminate those that are not absolutely necessary for the operation of the government or government agency.
If the budget is still not balanced,

Step 2 would be to review the old expenditures approved in last year's budget. (Old expenditures would be salaries and costs at last year's levels. Raises and increase in costs would be considered along with other new expenditures)
If the budget is still not balanced,

Step 3 would be to to either print new money or borrow more money. To print new money would cause inflation and the people would have to spend more money for their purchases in the coming year. To borrow money would postpone the cost (plus iterest) to the future.

Borrowing would quite likely postpone the costs which would be greater in the future and perhaps unfair to the people in the future.

Inflation would result in the people sharing the extra cost according to the amount of their purchases in the coming year.

Increased taxes would result in the people sharing the extra cost according to the amount of their income in the coming year.

What do you think would be the best way to balance the budget?