7. Whether budget deficits cause current account deficits is the subject of disagreement. In theory, and if we assume no change in the tax treatment of investment, an increase in the government budget deficit will raise the current account def- icit only if it reduces national saving. Econo- mists generally agree that an increase in the budget deficit caused by a temporary increase in government purchases will reduce national sav- ing, but whether an increase in the budget defi- cit caused by a tax cut reduces national saving is controversial.