The Difference Between the Deficit and the Debt
Find Information on the United States Government’s Deficits and Debt
Apr 19, 2009
This deficit is the total amount the government spends minus the total amount the government raises in revenue in a single year. The debt is the total amount owed.
How the Government Borrows Money
When the US government needs to borrow money, it issues treasury bonds. Anyone can purchase one of these treasury bonds. When you do this, you are letting the US government borrow some of your money. In return, the government will pay you interest on the amount you let it borrow. For FY 2008, for instance, the federal government raised $2,524 billion in revenue, but spent $2,983 billion. Therefore, it had a $459 billion ($2,983 billion minus $2,524 billion) deficit.
The Amount of our National Debt
The national debt is the total amount of money that the US Treasury Department owes to these borrowers. This debt was approximately $712 billion in 1980. It rose quickly to $2.4 trillion over the next decade. In 1997, the debt was about $3.8 trillion, but after that year, the government had four straight years of budget surpluses. A budget surplus is the opposite of a budget deficit. It means the government raised more money than it spent. In 2002, the government returned to deficit spending and the national debt again rose quickly. This debt was approximately $5,802,700,000,000, or almost $6 trillion at the end of FY 2008.
How Social Security Influences Our Debt Numbers
Social Security surpluses are another important aspect of the federal debt to understand. Revenue for Social Security comes from a payroll tax, or FICA. The amount of money raised for Social Security through the payroll tax exceeds that amount spent on the program. The federal government essentially “borrows” the money from these surpluses, leaving less money it needs to borrow to make up for the budget deficits. The Social Security surpluses, therefore, keep the deficits and debt lower than they would be without the surpluses. One of the biggest concerns about the national debt is that the cost of Social Security is expected to rise faster than the amount raised through the payroll tax, thus eroding the Social Security surpluses. At some point in the future, Social Security will need to borrow money to meet current obligations. The federal debt will rise more quickly as a result, unless Congress acts to reform the Social Security program.
Where to Find Information About the Federal Budget
Reliable estimates of future deficits can be found at the website of the Congressional Budget Office (CBO). For instance, the CBO currently projects the budget deficit for FY 2009 to be at least $1.7 trillion. You can see the daily totals of the national debt on the Treasury Department’s website. The Concord Coalition is an advocacy organization that argues for more fiscal discipline in the federal budget. Its website also has many useful resources.
