1.   Another friction point is the red-ink state budget, which has been running a deficit of several billion dollars.

2.   When the federal government runs a deficit, it borrows the extra money by selling more Treasury bonds to the public.

3.   With most of its boards now running annual deficits, it is thought tough cost-cutting steps may be taken.

4.   Governments were not responsible for this expansion of credit in the sense of running larger deficits and printing money to finance them.

5.   If the public sector is running a deficit, the other sectors of the economy may deposit part of their consequent financial surplus with the banking system.

6.   Already, the government has been forced to rely on high interest rates to keep inflation in check while running a deficit.

7.   And it is expected to run larger deficits in coming years.

8.   As for fiscal policy, Congress and the Bush administration expect to run budget deficits for the next few years at least.

9.   Before that, Italy ran deficits every year since the second world war.