The previous two sections have explained what government budget deficits are and how different measures of the budget deficit are related to the accumulation of government debt. We now consider the question: Why should we care about government budget deficits? In particular, we examine the propositions that government deficits “crowd out” private economic activity, that government debt harms future generations, and that government debt hampers the conduct of economic policy. With these questions answered, we will also be able to predict the likely effects of the budget surpluses that, at the time of this book’s publication (fall 1998), were expected to occur in 1999 and the early years of the next century.