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In simple terms, a budget deficit is the difference between what the federal government spends (called outlays) and what it takes in (called revenue or receipts). The national debt, also known as the public debt, is the result of the federal government borrowing money to cover years and years of budget deficits.
or look at it this way:
If the government spends more than it takes in over the course of one year, then it has run a deficit. A deficit applies to just one year.
So, if the government takes in $10 trillion dollars but spends $13 trillion dollars in one year, then it has run a $3 trillion dollar deficit.
When the government runs a deficit, then it must borrow money to make up the difference.
A debt is completely different. Think of debt as accumulated deficits.
If the government has to borrow money every year, then its debt will continue to grow year-after-year. This debt does not disappear unless the government elects to try and pay it down (rare occurrence).
The debt usually grows year-after-year. With each additional deficit, the debt continues to grow.
Some people think that if a government takes in more money than it spends in one year, then it suddenly doesn't have any debt. This is not the case. This simply means that the government has managed to run a surplus (opposite of deficit), but any accumulated debt is still there.
Not quite. Decifits and surpluses have nothing to do with revenues. The difference between what was actually budgeted and what was spent is either a deficit or a surplus. If Congress spends more than they budgeted, then it is a deficit. If Congress spends less than was budgeted, then it is a surplus.
Which is why Congress can have a surplus and the National Debt can still increase.
Particularly these days when Congress no longer sets their budget according to projected revenues. Congress deliberately sets their budget to be much higher than projected revenues in order to make the deficits appear smaller.
What you described is what is added to the National Debt: Spending - Revenue
If Congress budgets $4 trillion, and spends $3.75 trillion, but revenues are only $3 trillion, then Congress will have a $250 billion surplus, while adding an additional $750 billion to the National Debt.
Regardless of what has been proffered by the White House, the Congressional Budget Office, and others, the total gross national debt outstanding of the US of A hit $17.824 trillion in fiscal 2014 ended September 30. A jump for the fiscal year of $1.086 trillion.
It could have been worse: note how it jumped on October 1, the first day of fiscal 2015, by another $51 billion. That’s certainly one elegant way of putting some lipstick on the debt in fiscal 2014 – by kicking part of it into the next fiscal year.
It is easy to shrink the deficit. Simply increase the size of the budget and spend the same as before, and the deficit will magically shrink. Of course the National Debt will not-so-magically increase at the same time, but at least the deficit will be lower.
No the deficit itself dropped, from 680 to 486 billion.
Incorrect. The deficit dropped from $680 billion in 2013 to a projected $649 billion in 2014. It is also projected that the deficit will drop to $564 billion by the end of 2015.
Keep in mind that Congress budgeted $3.7 trillion in 2014, even though they knew projected revenues would only be $3 trillion. So even if they were exactly on budget, with no deficit or surplus, they would still have added $700 billion to the National Debt.
As it stands now, Congress has added $1.349 trillion to the National Debt for fiscal year 2014.
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Originally Posted by Glitch
Incorrect. The deficit dropped from $680 billion in 2013 to a projected $649 billion in 2014. It is also projected that the deficit will drop to $564 billion by the end of 2015.
Keep in mind that Congress budgeted $3.7 trillion in 2014, even though they knew projected revenues would only be $3 trillion. So even if they were exactly on budget, with no deficit or surplus, they would still have added $700 billion to the National Debt.
As it stands now, Congress has added $1.349 trillion to the National Debt for fiscal year 2014.
At best your argument should be that the information provided in the OP is incorrect, not that i was incorrect, as i quoted the information provided.( side note, you choosing a different source doesnt mean your source is more right than the OP)
At worst, you are both wrong and deflecting because the main point was that the deficit indeed is projected to drop and the person i responded to said it wasnt( and your own source says it i will).
At best your argument should be that the information provided in the OP is incorrect, not that i was incorrect, as i quoted the information provided.( side note, you choosing a different source doesnt mean your source is more right than the OP)
At worst, you are both wrong and deflecting because the main point was that the deficit indeed is projected to drop and the person i responded to said it wasnt( and your own source says it i will).
And my point is that it does not matter if the deficit drops or not. When Congress can manufacture any size budget they want, without regard for projected revenues, then the entire budgetary process is a complete scam. Pure fantasy.
Lets, for the sake of argument, say that revenues and spending stay exactly the same in 2015 as they were in 2014: $3 trillion in revenues and $4.349 trillion in total spending. All Congress has to do in order to lower the deficit for 2015 is increase the budget from $3.7 trillion in 2014 to $4 trillion in 2015.
Presto! The deficit for 2015 is now lowered to $349 billion for 2015 by congressional magic.
Never mind that it still adds yet another $1.349 trillion to the National Debt.
I think our economic model that is nearly 100% premised on a constantly growing economy is going to lead to a catastrophe one day.
It already did about five years ago, and it probably will again in the future, but that has been the way US, and other countries with central banks have chosen to run things.
Incorrect. The deficit dropped from $680 billion in 2013 to a projected $649 billion in 2014. It is also projected that the deficit will drop to $564 billion by the end of 2015.
Keep in mind that Congress budgeted $3.7 trillion in 2014, even though they knew projected revenues would only be $3 trillion. So even if they were exactly on budget, with no deficit or surplus, they would still have added $700 billion to the National Debt.
Exactly, so even though they would have added $700 billion to the debt, but only added $649 Billion, this means they saved $51 billion due to refinancing debt at a lower interest rate. And since these are all short term (3 months or so), when the interest rates climb again, this will need refinanced at a MUCH HIGHER rate, meaning they are pushing the deficits down the road for another President to deal with..
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