A) What are some of the causes of deficits since the 1800's?

B) How does the government raise the money to finance the deficits?

A) What are some of the causes of deficits since the 1800's?

In general, deficits increase and remain high because of recessions. During recessions, government spending increases to help lessen the impact of the recessions. Additionally, during recessions, tax revenue declines because lower-income levels result in less tax revenue being collected. Another reason for deficits (especially in the United States) is continued increases in defence spending, which makes up a significant portion of all government spending. In addition, spending on government programs that are geared at helping elderly residents (ie Social Security and Medicare) have been increasing in recent years because of longer life expectancy's.

B) How does the government raise the money to finance the deficits?

When the government runs a deficit, they need to borrow money. This is done by selling securities, typically government bonds. The goal is then to repay the money borrowed during expansionary periods when there are budget surpluses.