Depends what you're referring to as 'the deficit'.
If you're referring to the gap between government revenue and government spending, then they certainly do, because increasing government revenue closes that gap (as long as you don't increase spending too much alongside it). This is what I usually assume people mean when they talk about 'the defecit' at the moment.
If you're referring to the quantity of soveriegn debt - debt owed by the government - then they indirectly do, because if the government gets more money in then it can afford to reduce its borrowing load without cutting services, if that's what it chooses to do with the money. This isn't really a 'defecit' at all, but people often confuse them.
If you're referring to the national external debt / balance of trade defecit, then they don't directly, and it's an ongoing argument what they do to that - some people would say because they cause capital flight and discourage innovators (because they know they'll get taxed if they get rich) they might increase the trade defecit, some people would say that because government infrastructure spending supports local productivity and industry then they might reduce the trade defecit if the government puts the new funds to good use.
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(no subject)
Date: 2013-01-28 01:24 pm (UTC)If you're referring to the gap between government revenue and government spending, then they certainly do, because increasing government revenue closes that gap (as long as you don't increase spending too much alongside it). This is what I usually assume people mean when they talk about 'the defecit' at the moment.
If you're referring to the quantity of soveriegn debt - debt owed by the government - then they indirectly do, because if the government gets more money in then it can afford to reduce its borrowing load without cutting services, if that's what it chooses to do with the money. This isn't really a 'defecit' at all, but people often confuse them.
If you're referring to the national external debt / balance of trade defecit, then they don't directly, and it's an ongoing argument what they do to that - some people would say because they cause capital flight and discourage innovators (because they know they'll get taxed if they get rich) they might increase the trade defecit, some people would say that because government infrastructure spending supports local productivity and industry then they might reduce the trade defecit if the government puts the new funds to good use.
(no subject)
Date: 2013-01-28 01:25 pm (UTC)