Why did Keynes oppose the annual balanced budget policy?

Keynes believed that the fiscal policy of balanced budget not only failed to play an active role in the great crisis of 1930s, but added fuel to the fire and made the crisis worse. When the economy is depressed, tax revenue will inevitably decrease due to the decline in income. At this time, the government still insists on balancing the budget, and it is bound to increase taxes or reduce government spending. When taxes increase, people's disposable income will be less, and their expenses will naturally decrease. At this time, government expenditure will also decrease, so the total expenditure of the whole society will further decline, thus deepening the economic recession. On the other hand, when there is inflation, as income increases, tax revenue will also increase. In order to maintain a balanced budget, the government can only reduce taxes or increase expenditures. The former has correspondingly increased people's disposable income and expenditure, coupled with the increase of government expenditure, so the total social expenditure has further expanded and inflation has intensified. In this way, the fiscal policy of pursuing a balanced annual budget is one of the reasons leading to economic fluctuations. Keynes pointed out that the great crisis exposed a normal state of capitalist economy, that is, insufficient effective demand. In other words, it is impossible for people's consumption demand and enterprise's investment demand to reach the necessary level of balanced economic growth spontaneously. To expand effective demand and achieve full employment, it is impossible to rely on market mechanism, but only by expanding government fiscal expenditure and implementing a positive deficit fiscal policy. Keynes's deficit finance theory is very popular in the western world, which not only enables western countries to overcome the difficulties of the great crisis, but also embarks on the fast lane of economic development. Therefore, Keynesianism has been favored and become the mainstream school of western economics, and its followers continue to carry forward the theoretical system. American economist Hansen is one of them. In his view, Keynes's deficit finance theory was born in the special period of the great crisis and really made inestimable contributions. However, the capitalist economy is not always in danger, sometimes it is prosperous and sometimes it is depressed. Therefore, fiscal policy should not focus on expansion, but should alternately tighten and expand according to the replacement of economic prosperity and depression. In economics, it is called compensatory fiscal policy. Specifically, fiscal policy is to go against the wind: during the economic depression, the government should increase expenditure and reduce the tax rate. In the period of economic prosperity, the government should reduce expenditure, raise tax rate and create budget surplus to reduce the excessive demand of society. According to this policy, the fiscal budget does not need to be balanced every year, and the deficit budget can be implemented in the depression period and the surplus budget can be implemented in the boom period, so that the economy can balance its income and expenditure for a long time and basically balance its income and expenditure. After the birth of Keynesian theory, it brought prosperity to the western world for nearly half a century. The economic strength of European and American countries is increasing, and the functions of the government are also expanding. In particular, these countries began to establish "welfare States" after World War II, and their fiscal policies were adjusted accordingly around this goal. Take Britain as an example, its welfare system is all-encompassing and very comprehensive. Since the British citizen was born, there has been a child welfare fund waiting for him; After going to school, you can get an education allowance; Except for a few special medical services, it costs almost nothing to see a doctor; Older, with a pension; Unemployment includes unemployment allowance and social relief; In addition, there are maternity subsidies, housing subsidies, difficulties subsidies and so on. The government's concern for the public is meticulous. There is an old saying in China that wool is found in sheep. In order to build a welfare state, the government's functions are infinitely expanded and its expenditure is increasing. To eliminate the high fiscal deficit, there is only one way out-increasing taxes. While enjoying the unprecedented high welfare, the British people also bear the unprecedented tax burden. 1976 statistics show that the after-tax profit of British enterprises is only 8.5%, which is 7 percentage points lower than that of North American countries. Although the excessively progressive personal income tax makes the income of the British people more equal, those creative talents and adventurous investors are clamoring for losses, and a large number of talents and funds are far away from Britain to choose another livelihood. The welfare finance that was originally dedicated to the people has become a chicken rib. It is a pity to abandon it, which really goes against the original intention of decision makers. In fact, no fiscal policy can be perfect. The fiscal policy of balanced budget can't save the great crisis; The welfare state's finance can't jump out of the cycle of rising taxes and expenditures alternately; The compensatory finance of Keynesian school has also caused "stagflation" to the prosperous western economy for decades. But both systems and policies are heroes created by the times, and there are many commendable places in history. Whether economists or government policy makers, if they can learn a lesson from it, they will not take it out of context or abandon it rashly. If they are eclectic and based on reality, they will certainly make the future fiscal policy less flawed and more perfect.