The phenomenon of deficit is a rather straightforward one, implying the lack of financial resources and suggesting that the current approach toward spending and resource management could use improvements. Traditionally, two types of budget deficit are singled out; these are cyclical and structural ones (Long, 2018). Applying the specified taxonomy to the U.S. economy, one has to admit that the American economic environment suffers from the chronic structural deficit.
Caused by the mismatch between the current financial strategy and the possibilities that the existing range of resources suggests, structural deficit requires a well thought-out response to the factors that have caused the observed situation to develop. As a result, the process of change that fighting with structural budget deficit entails is likely to be quite extended and time-consuming (Long, 2018). Moreover, in order to address the issue of structural budget deficit, the American government will have to look at the historical prerequisites to its emergence.
Considering similar historical examples might also help. For instance, the great Depression as one of the most infamous economic recessions needs to be examined closer. Furthermore, the crisis of 2008 may be examined as well, providing insights into the inherent problems within the U.S. economy. In fact, comparing the two crises in question, one will realize that the 2008 one was not as drastic as the Great Depression since the latter provided important lessons that were used to fight the 2008 issue. Consequently, the current budget deficit can be handled accordingly (Long, 2018). Specifically, the U.S. government will have to alter the present fiscal policies to encourage the development of entrepreneurship and produce more sensible taxation policies, ensuring that businesses should thrive.
Reference
Long, H. (2018). Why America’s return to $1 trillion deficit is a big problem for you? Web.