Report Outline
Complications of Deficit Financing
Characteristics of the National Debt
Credit Control and Debt Management
Special Focus
Complications of Deficit Financing
Money markets are being put to severe strain by government borrowing to finance the biggest federal budget deficit since World War II. All the skill and ingenuity of the government's debt managers will be needed to keep the strain of the borrowing, combined with mounting inflation and rising interest rates, from disrupting the entire economy. The difficulty of financing a deficit that will total at least $14 billion by next June 30, and might run close to $22.4 billion without a tax increase, was aggravated by the British government's decision on Nov. 18 to devalue the pound sterling. Until then, borrowing pressures had been felt mostly in the bond market. But the cost of business borrowing from American banks, already moving upward, surged ahead in direct consequence of London's action.
Devaluation of the British pound, from $2.80 to $2.40 in dollar terms, was accompanied by an increase in England's basic interest rate to a 53-year high of 8 per cent. To prevent a massive outflow of American investment funds to England, the Federal Reserve Board in Washington acted within hours to raise the “Fed's” basic rate on lending to commercial banks by half a percentage point, to 4.5 per cent. Some of the nation's leading banks, in turn, began pushing interest on their own new loans up to 6 per cent and more.
Britain's devaluation increased doubts as to the ability of the American economy to maintain world confidence in the dollar at a time of huge deficits in both the federal budget and the country's balance of international payments. President Johnson told a news conference, Nov. 17, that the federal budget deficit might reach $30 billion, even $35 billion, if Congress persisted in refusing to impose a 10 per cent income tax surcharge. But administration spokesmen on Nov. 29 revised this figure downward to $22.4 billion under close questioning before the House Ways and Means Committee. |
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Federal Budget and National Debt |
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Sep. 01, 2017 |
National Debt |
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Jul. 12, 2013 |
Government Spending |
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May 15, 2012 |
State Capitalism |
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Mar. 18, 2011 |
National Debt |
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Nov. 14, 2008 |
The National Debt |
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Dec. 09, 2005 |
Budget Deficit |
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Apr. 13, 2001 |
Budget Surplus |
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Feb. 01, 1991 |
Recession's Regional Impact |
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Jan. 20, 1984 |
Federal Budget Deficit |
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Sep. 09, 1977 |
Federal Reorganization and Budget Reform |
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Nov. 24, 1972 |
Limits on Federal Spending |
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Jan. 08, 1969 |
Federal Budget Making |
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Dec. 06, 1967 |
National Debt Management |
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Aug. 01, 1962 |
Fiscal and Budget Policy |
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Nov. 27, 1957 |
National Debt Limit |
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Mar. 20, 1957 |
Spending Controls |
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Dec. 24, 1953 |
Public Debt Limit |
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Feb. 13, 1952 |
Tax and Debt Limitation |
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Nov. 30, 1949 |
Government Spending |
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Jan. 06, 1948 |
Legislative Budget-Making |
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May 23, 1944 |
The National Debt |
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Feb. 01, 1943 |
The Executive Budget and Appropriations by Congress |
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Dec. 27, 1939 |
Revision of the Federal Budget System |
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Oct. 10, 1938 |
The Outstanding Government Debt |
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Nov. 20, 1937 |
Budget Balancing vs. Pump Priming |
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May 02, 1936 |
The Deficit and the Public Debt |
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Oct. 19, 1934 |
The Federal Budget and the Public Debt |
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Feb. 10, 1933 |
Extraordinary Budgeting of Federal Finances |
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Dec. 01, 1932 |
Reduction of Federal Expenditures |
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Dec. 01, 1930 |
The National Budget System |
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Oct. 02, 1930 |
Federal Revenues and Expenditures |
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Nov. 02, 1927 |
The Public Debt and Foreign Loans |
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Nov. 15, 1926 |
Rising Cost of Government in the United States |
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Feb. 05, 1925 |
Four Years Under the Budget System |
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