what causes a budget deficit 
both levels of taxation and spending affect a government s budget deficit common scenarios that create deficits by reducing revenue and increasing spending include budget deficits may occur as a way to respond to certain unanticipated events and policies such as the increase in defense spending after the september 11 terrorist attacks 2effects of a budget deficitbudget deficits affect individuals businesses and the overall economy as the government takes steps to improve the deficit spending for programs such as medicare or social security may be curtailed improvements to infrastructure may also be affected to increase revenue tax hikes may occur for high income earners or large corporations which may affect their ability to invest in new business ventures or hire new employees strategies used to reduce budget deficitscountries counter budget deficits by promoting economic growth through fiscal policies such as reducing government spending and increasing taxes determining the best strategies regarding which spending to cut or whose taxes to raise are often widely debated to pay for government programs while operating under a deficit the federal government borrows money by selling u s treasury bonds bills and other securities 