Explainer: Key economic concept - What is a Fiscal Deficit?

Just like it is risky for you to spend more than you earn, relying on credit cards and facilities, it’s also risky for the government to spend more than it gets in taxes.

Whenever politicians or economists talk about the economy, it often sounds like a ‘warra-warra’ waffle.

To make economic policy something YOU can use to fight for freedom, let’s un-warra-warra and de-waffle a key economic term: Fiscal Deficit.


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Transcript

Whenever politicians or economists talk about the economy, it often sounds like a ‘warra-warra’ waffle.

To make economic policy something YOU can use to fight for freedom, let’s un-warra-warra and de-waffle a key economic term: fiscal deficit.

Whenever government spends more than it raises in a period, like a budget year, the shortfall is what we call the ‘Fiscal Deficit’.

Now, just like it is risky for you to spend more than you earn, relying on credit cards and facilities, it’s also risky for the government to spend more than it gets in taxes.

Fiscal deficits can be measured in many ways, but is usually measured as a percentage of GDP.

At close to 14%, South Africa’s fiscal deficit today is far higher than what is considered to be large and risky.

When a government keeps on running fiscal deficits, it pushes itself deeper and deeper into debt – debt that attracts an interest – an interest you as the taxpayer actually pays.

So, instead of your taxes paying for schools, hospitals, roads, and social support, a large chunk of the taxes you pay simply goes to pay down debt interest.

Any responsible person will tell you:

“If you’re in debt, get out of it as soon as you can by living within your means!

Don’t spend more than you earn and only on things you really need!”

It’s time YOU say this to government.

Ultimately, there’s no such thing as ‘government money’. Every cent government has is taxpayers’ money – your money. And you have the right and the freedom to demand that government works responsibly with it. If you don’t, fiscal deficits will keep snowballing into more and more debt and debt interests – in the end, making our country bankrupt and our people less free.

  

Your freedom is worth fighting for. Join FAN today to build a new tomorrow.

 

 

Illustration sources available here.