Deficit Reduction

Deficit reduction involves decreasing the gap between government revenue (taxes and other income) and its expenditures (spending). When the government spends more than it earns, it runs a deficit, adding to the national debt. To reduce this deficit, policymakers may increase revenue through higher taxes or cut spending on programs and services. The goal is to balance the budget or at least lessen the borrowing needed each year, which can help improve the economy’s stability and reduce long-term debt. Effective deficit reduction requires careful planning to maintain essential services while controlling costs.