As we have seen in this chapter, government budget deficits contribute to aggregate demand and thus have the potential to be used as an integral part of a fiscal policy designed to stabilize national income. However, we have also seen that government budget deficits crowd out private economic activity and impose a long-term burden, either through a reduced stock of physical capital or through greater foreign indebtedness. A tradeoff therefore appears to exist between the desirable short-run stabilizing role of deficits and the undesirable long-run costs of government debt. This tradeoff has been the source of constant debate. Here we examine some possible solutions.