PREFACE For much of its modern history, the U.S. government has spentmore money than it has taken in. This situation, called deficitfinancing or deficit sperzding, is a term economically neutral butpolitically opprobrious. Conservatives have long held that liberals,whom they see as advocates of increasing government's size andcost, recklessly add to the natio~al debt by policies of "tax and tax,spend and spend." Liberals, while believing in the value of cre-ative, often expensive government programs, have striven to ap-pear fiscally prudent, and have often welcomed or initiatednational budget-balancing schemes: The fairly rigid political alignment over the question of deficitfinancing broke apart during the early 1980s, in the face of thehuge deficits included in the successive budgets of President Ron- aid Reagan. Reagan is generally regarded as the most conservative president in five decades, and his early political career was founded on balanced budgets as the cornerstone of fiscal responsi- bility. Since 1981, questions of budget balancing and debt mainte- nance have occupied business people, economists, and politicians)blem may be succinctly illustratecby the table on the following page. Two disturbing trends are evident. (1) The deficit has grownat an unprecedentedly rapid rate since the 1970s. (2) Although thefluctuation between surplus and deficit was fairly steady between1915 and 1970, the amount of interest payable on the public debthas never ceased growing, because the aggregate debt itself hasnever ceased growing. Each fiscal year's deficit is added to the na-tional debt, which in 1983 amounted to $1.377 trillion. In themonth of December 1984 alone, for example, the federal govern-ment had to spend $22 billion on interest to service the debt. Theseinterest payments will probably continue to rise, because only abudget surplus--an eventuality not even contemplated in mid-1985--can reduce the national debt, and then only if Washington