National Debt vs. Budget Deficit: Here’s the skinny on the U.S. National Debt and Annual Budget Deficit, including the size of both.
If you’re like me, the words “national debt” and “national deficit” bring with them an unshakeable feeling of gloom and doom. It’s not that I lay awake at night worried about the U.S. debt and deficit. When they do cross my mind, however, I know that eventually we are all going to have to sacrifice in some way to deal with the financial irresponsibility of our leaders.
Rather than sticking our heads in the sand, however, now is a good time to understand the difference between our nation’s debt and its annual deficit. And then we’ll look at just how big the problem really is.
Annual Budget Deficit vs. National Debt
The United States of America spends a huge amount of money each year on all things that fall under the government’s umbrella. Some of the top spenders are:
- Social work and welfare spending (including Medicare and Medicaid)
- National defense
- The Treasury department (which includes interest on the national debt)
In order to cover all this spending, which far exceeds the federal government’s total revenues each year, the government borrows money from investors. Investors buy US securities, effectively lending America the money it needs to cover the difference between its income and expenses.
This difference is formally known as the “budget deficit.” Deficit essentially means “short fall.” And for almost every year since 1969, America has reported a spending deficit. There were a few years, from 1998-2001, when a surplus was recorded.
The total amount of money America owes to its lenders constitutes the “national debt”. As with all debt, interest is the motivation for lenders to give up their money for a time, and the national debt continues to accrue interest.
So for the deficit, think of the annual shortfall we have to borrow to get by each year. In contrast, the national debt is the accumulation of those shortfalls over the history of our country.
How Big are the Debt and Deficit
Now that we have a sense of the meaning of debt vs. deficit, let’s take a quick, albeit painful, look at this year’s debt and deficit projections. For the total U.S. debt, the image below was captured on November 13, 2010 from the TreasuryDirect.gov and shows the total U.S. debt:
To get a sense of perspective, the table below shows the U.S. debt since 2000:
|Date||U.S. National Debt|
Now let’s take a look at the annual budget deficit numbers. The revenue for fiscal year 2017 (ended 9/30/17) was $3.3 trillion, according to the CBO. Not bad, right? But wait!
Federal spending in 2017 was $4.0 trillion. Don’t get out your calculator, it probably doesn’t even go that high. The deficit was $666 billion. That means that the U.S. borrowed $666 billion last year just to make ends meet.
Oh, and remember the interest we owe on every loan? Well, the line item for that expense alone is over $458 billion, according to the Treasury.
What’s Your Share of the National Debt?
If every man, woman and child in the United States received an equal share of the US debt, how much would each pay?
Here’s a rough breakdown:
- Assume the US population to be 310 million (according to the US census info).
- Round the national debt to $20.2 trillion.
Dividing the debt by the population yields: $65,161 per person. And believe it or not, if you’d like to make a voluntary contribution to pay down the U.S. debt, you can. And before you scoff at such an idea, I should tell you that so far in 2018, the U.S. government has received $211,183.46 in voluntary contributions.Topics: Taxes