when revenues exceed expenses there is a budget surplus when expenses exceed revenues there is a budget deficit while neither of these is a technically balanced budget deficits tend to elicit more concern 
the term budget surplus is often used in conjunction with a balanced budget a budget surplus occurs when revenues exceed expenses and the surplus amount represents the difference between the two in a business setting a company can reinvest surpluses back into itself such as for research and development expenses pay them out to employees in the form of bonuses or distribute them to shareholders as dividends in a government setting a budget surplus occurs when tax revenues in a calendar year exceed government expenditures the united states government has only achieved a budget surplus four times since 1970 it happened during consecutive years from 1998 until 2001 1a budget deficit by contrast is the result of expenses eclipsing revenues budget deficits necessarily result in rising debt as funds must be borrowed to meet expenses for example the u s national debt which is in excess of 34 trillion as of june 2024 is the result of accumulated budget deficits over many decades 2advantages and disadvantages of a balanced budgetproponents of a balanced budget argue that excessive budget deficits saddle future generations with untenable debt just as any household or business must balance its spending against available income over time or risk bankruptcy a government should strive to maintain some balance between tax revenues and expenditures most economists agree that an excessive public sector debt burden can pose a major systemic risk to an economy eventually taxes must be raised or the money supply artificially increased thus devaluing the currency to service this debt this can result in a crippling tax bill once taxes are eventually raised excessively high interest rates that crimp business and consumer access to credit or rampant inflation that may disrupt the entire economy on the other hand running consistent budget surpluses tends to not be politically popular while it may be beneficial for governments to sock away surpluses for so called rainy day funds in case of a downturn in tax revenue the government is generally not expected to operate as a for profit business the existence of surplus government funds tends to lead to demands for either lower taxes or more often increased spending since money accumulating in public accounts makes an attractive target for special interest spending running a generally balanced budget may help governments to avoid the perils of either deficits or surpluses however some economists feel budget deficits and surpluses serve a valuable purpose via fiscal policy enough so that risking the dire effects of excessive debt may be worth the risk at least in the short run keynesian economists insist that deficit spending represents a key tactic in the government s arsenal to fight recessions during economic contraction they argue demand falls which leads to gross domestic product gdp declines deficit spending keynesians say can be used to make up for deficient private demand or to stimulate private sector spending by injecting money into key sectors of the economy during good economic times they argue though perhaps less forcefully governments should run budget surpluses to restrain private sector demand driven by excessive optimism for keynesians a balanced budget in effect represents an abdication of the government s duty to use fiscal policy to steer the economy one way or another 