The federal government starts a policy of deficit spending when the government spending exceeds income; it spends more money than it is taking in through tax revenue and other means, such as bonds. It occurs with a plan to repay the debt, plus interest charges over time. It is a standard technique used by the federal government, along with most governments around the world, which operate on budgets based on economic science. Deficit spending is one of the numerous tools used by the federal government to manage the world’s largest economy (the largest in history) by use of such credit and financial instruments as interest rates, Bonds, Treasury bills, currency valuation and tariffs to influence a modern national economy.
