LeoGlossary: Deficit Spending

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A budgeting situation where spending exceeds the revenues brought in. This ends up running up the debt level as that is the only way to compensate for the deficit (shortfall). It is a commonplace among national governments as they spend decades in deficit spending.

Government isn't the only entity that engages in this type of budgeting. The difference is that entities other than national governments cannot get away with it for too long. When private entities embark upon this process, they first burn through savings and then have to raise capital through debt. This only goes so far before lenders cut off the process.


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