National Debt vs Budget Deficit: Do you know how this works?

Question

This is a bipartisan issue. Greedy politicians are on both sides of the aisle.

Suppose you want to spend more money this month than your income. This situation is called a "budget deficit". So you borrow. The amount you borrowed (and now owe) is called your debt. You have to pay interest on your debt. If next month you don't have enough money to cover your spending (another deficit), you must borrow some more, and you'll still have to pay the interest on the loan. If you have a deficit every month, you keep borrowing and your debt grows. Soon the interest payment on your loan is bigger than any other item in your budget. Eventually, all you can do is pay the interest payment, and you don't have any money left over for anything else. This situation is known as bankruptcy.

Each year since 1969, Congress has spent more money than its income. The Treasury Department has to borrow money to meet Congress's appropriations. The total borrowed is more than $9,000,000,000,000 and growing.

Point being, no one president is to blame entirely. I keep seeing remarks and whatnot about Bush compared to others.

Answer 1

which is yet another reason as to why we need term limits in Congress.

I also feel they should take a good look at what is already law, see where it overlaps, and cut funding in those places.

If they have enough time to bicker about waterboarding, they should have enough time to do this. I find it appalling how many Congressmen have admitted to not reading the entirety of a bill (i.e. the earmarks) before giving their okay to it.

Hell, I can balance my budget...

Answer 2

Think of the "national debt" to be like the money you owe your creditors for things you bought with credit cards over the span of say, 5 years, many bills of which are still unpaid. The more you pay, the more you owe because of rising interest. OK? Got it? That's like the national debt.

Now, think of the "budget deficit" to be like the credit card companies keep raising your credit limit by thousands and thousands of dollars every month. The catch is, in order to take advantage of the additional credit line, you MUST spend the extra line of credit each month, which in turn means you get even more credit the next month and so on and so on.

As your "budget deficit" gets bigger and bigger and you're spending more and more each month in order to take advantage of the extra line of credit dollars, your monthly bills and interest payments sky-rocket. This becomes a vicious cycle from which you can never completely free yourself.

Answer 3

All the banks and home loan lenders know exactly how it works...More specifically Country Wide Home loans who have recently been bailed out of bankruptcy as well and the interest rates being raised..Then they raise the bar on credit reports/scores on who can afford homes...The interest ONLY scam loans cause this horrific current snow ball of stock markets, deficit etc!!!!! Now all the people who could NOT afford homes much less the bills they had are bankrupting out because the interest only periods have ended...... NOw this country is REAPING what those so called responsible lenders has made a total MESS of....

Answer 4

yes. I know how it works. And I know that tjhe bill will come due. But thanks for the econ lesson

But there was a bugdet surplus and the books were balanced when Clinton left office. And it was bi-partisan because the money came from a surtax on the wealthiesr 5% of the population that Bush Sr enacted.

biggest problem was the huge increase that REAGAN pushed through.

And W says we can handle a much larger debt.

Answer 5

you're conversing approximately 2 diverse "deficits". there is the commerce deficit, that's the version between imports and exports, as you mentioned. there is likewise the funds deficit, that's the version between how plenty the government spends on amenities and how plenty they soak up (by using taxes and different components). The funds deficit is what the government is in charge for, no longer the commerce deficit.

Answer 6

The blame cannot solely be placed on Bush, however, since he ran as a fiscally responsible Conservative, the irony is there.

Answer 7

I know the National Debt increases more than 1.49 billion dollars per day thanks to the Bushwhacking of our country.

Answer 8

And your point is....