Journal chill's Journal: Deficit vs Debt 4
I've received some feedback that a few acronyms and basic economic definitions need to be spelled out. So, without further ado, here are a pair:
Deficit - If you spend more than you make during a year, this is a deficit. For example, if you make $100,000 per year but spend $120,000 then you have a deficit that year of $20,000. The money comes from either savings or you have to borrow it. In the government's case, since they have no savings, it is borrowed. Deficits are reported on a per-year basis.
Debt - This one is simple, it is the total amount you owe to others. Add all those deficits, plus interest, penalties and fees and you'll get debt. Keep running a deficit, year after year, and the debt will keep growing.
So, when you hear things like "Obama proposes to dramatically reduce those numbers, said White House budget director Peter Orszag: "We will cut the deficit in half by the end of the president's first term." The plan would keep the deficit hovering near $1 trillion in 2010 and 2011, but shows it dropping to $533 billion by 2013. That means the government will be spending $1 trillion more than it brings in for the years 2010 and 2011, and only $533 billion more in 2013.
Notice there is no mention of debt. What is being left out is those $2 trillion for 2010-2011, and $533 billion for 2013, and split the difference to $750 billion for 2012 are all piled onto our already massive debt. That is approximately $3.25 trillion on top of the already $11.2 trillion already owed.
Currently, of that $11.2 trillion, $6.8 trillion is owned by "the Public". That includes State and Local governments, companies and people who bought bonds, banks, hedge funds, foreign governments and the like. The other $4.3 trillion is owed to other parts of the government, like the Social Security Trust Fund.
Check it out for yourself at the Office of Budget Management.
I'll you with the following tidbits.
1. Since 1961 the United States national debt has never gone down. John F. Kennedy was President the last time the debt decreased.
2. Lest you think the Republicans are any better, keep in mind that for every dollar a Democratic President has raised the national debt in the past 30 years, Republican presidents have raised the debt by $2.52.
Surpluses during Clinton years (Score:1)
There were budget surpluses during a period at the end of Clinton's term as president. While at that time government continued sucking in the Social Security surplus, it didn't have to issue any new bonds.
The Social Security debt will probably never be fully paid back -- retirement age will be increased or benefits decreased or some combination of the two.
The rest of the debt ... well, America can't muster the political will to increase taxes to continuously generate the budget surpluses needed for that deb
Re: (Score:2)
There were surpluses during the Clinton years. Believe it or not (Republicans, I'm talking to YOU), he was the most fiscally responsible President we've had in decades. The problem was Congress decided to not use those surpluses to pay down the debt, but to spend more and more. I remember the debates.
Full faith and credit (Score:1)
http://www.publicdebt.treas.gov/ [treas.gov]
http://www.treasurydirect.gov/NP/BPDLogin?application=np [treasurydirect.gov]
Lucky the T Bonds are mostly electronic. Not sure there is enough space for them physically unless they are in denominations of 10 million or more.
Debt=Money Supply (Score:2)
Keep in mind that debt translates directly to the money supply in our system. What is happening here is inflationary wealth transfer.
In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.
Guess who said that.... Alan Greenspan.