deficit spending

noun

Definition of deficit spending

: the spending of public funds raised by borrowing rather than by taxation

Examples of deficit spending in a Sentence

Recent Examples on the Web

Lopez Obrador says his program can be funded without deficit spending, with the money saved by eliminating graft. — Bloomberg, Fortune, "What You Need to Know About the Historic Victory of Mexico's New Left-Wing President," 2 July 2018 Another concern is that the huge corporate tax cut, and ensuing deficit spending, has taken away a key stimulus opportunity that could have been used to re-energize the economy. — Phillip Molnar, sandiegouniontribune.com, "Is a flattening yield curve a sign of a coming recession?," 6 July 2018 But for those precious few yearning to return to the days of nonstop tax increases, deficit spending and massive job losses then Martin O’Malley has done them a favor by endorsing Rushern Baker. — Doug Donovan, baltimoresun.com, "Rushern Baker unleashes O'Malley on Gov. Hogan in Democratic campaign for Maryland governor," 21 June 2018 And his rant proved potent among conservatives who reacted much more aggressively to Obama’s health care plan than to, say, Bush’s massive deficit spending. — Jane Coaston, Vox, "In 2018, the Tea Party is all in for Trump," 15 May 2018 Berri, the sports economist, sees other reasons for rosy forecasts and deficit spending in college sports. — Christopher Schnaars, USA TODAY, "Is overspending catching up to these Power 5 schools?," 28 June 2018 Democrats pointed to the CBO report on the debt limit as evidence that Republican deficit spending is already coming home to roost. — Tory Newmyer, Washington Post, "The Finance 202: Here's one unhappy side effect of the Republican tax bill," 1 Feb. 2018 In 1978 West Germany agreed to stimulate its economy with deficit spending to help the U.S. narrow its trade deficit. — Greg Ip, WSJ, "U.S. Turns From Uniter to Disrupter on Global Stage," 20 June 2018 At the same time, a great deal of the trade deficit is made possible by U.S. government deficit spending, so reining that in could actually reduce the trade deficit. — David Z. Morris, Fortune, "Why American Businesses Should Be 'Terrified' After President Trump's Comments on Trade," 9 June 2018

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'deficit spending.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

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Last Updated

17 Sep 2018

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The first known use of deficit spending was in 1938

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deficit spending

noun

Financial Definition of deficit spending

What It Is

Deficit spending is spending that reduces or offsets a surplus. In the business world, the term often refers to situations where expenses exceed revenues, imports exceed exports or liabilities exceed assets.

How It Works

Deficit spending creates fiscal deficits and trade deficits.

Fiscal deficits occur when a government's expenditures exceed its revenue. A government usually borrows money (by issuing Treasury securities or similar instruments) to fill the gap or "fund the deficit."

Trade deficits (also called current account deficits) occur when a country imports more than it exports.

Why It Matters

Deficit spending is controversial. The famous economist John Maynard Keynes argued that it stimulated economies by giving governments the money to purchase goods and services and were thus particularly useful for getting countries out of recessions. However, many scholars also argue that governments should not engage in deficit spending regularly because the mountain of debt they create makes for unsustainable economies in the long run.

Source: Investing Answers

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