The State > The Government | ||||||||||||||||||||||
Federal financesBy 1995, the federal government had been spending more than it collected
in revenues for 25 consecutive years. That year, the deficit (the amount
by which government spending exceeds revenues in any given year) was $37.5
billion. As a result of persistent deficit financing, In 1994, the federal government undertook a massive program to reverse
the nation's financial course. Because of a reduction in program spending
and a growing economy, Surpluses have allowed the government to direct more money toward paying
off the accumulated debt. As a result, the cost of paying interest on
the debt has dropped from a high of 33 cents of every dollar of revenue
collected by the federal government in 1995/96 down to 19 cents in 2001/02.
Another promising sign is the decrease in the debt-to-GDP ratio, which
gives a picture of the size of a nation's debt in relation to the size
of its economy. Though still high by historical and international standards,
Federal government revenue fell to $190 billion in 2002/03, down from $192 billion in 2001/02. This second straight decline was due in part to a drop in personal income taxes, explained largely by weakness in the stock market. As well, corporate income taxes dropped, reflecting a weak profit performance in the previous year. At the same time, federal government expenditures decreased, albeit marginally, from $185 billion in 2001/02 to $184 billion in 2002/03. The slowing in federal spending was partly due to a $3.8 billion drop in federal debt charges, including lower interest on government debt. Federal agricultural subsidies and compensation to airlines also decreased. The lower compensation to airlines occurred as their operating conditions recovered following the events of September 11, 2001.
|
||||||||||||||||||||||
|