Many ask the difference between the deficit and the national debt. The deficit is the yearly amount the government spends greater than it's revenues. (If the government spends less, then there is a urplus.) The national debt, on the other hand, is the accumulation of all the deficits.
So, How Much Is The National Debt, Anyway?
Currently the national debt is at $14.3 trillion. In 2001 the Congressional Budget Office (CBO) forcast we would have a surplus of $2.3 trillion by 2011. That is almost a $17 trillion difference!
The Explosion Of The National Debt
Many people wonder how this could happen. Most of the cause is due to legislation. There were six pieces of legislation during the past decade that caused the national debt to increase:
- The Bush tax cuts of 2001 and 2003 for households earning more than $250,000 annually.
- Funding two wars: Iraq and Afghanistan.
- A Medicare perscription drug benefit for which there were no underlying revenues.
- The Troubled Asset Relief Program (TARP) to prevent a financial meltdown.
- The 2009 Stimulus Package which was supposed to create jobs during the recession.
- The extension of the Bush tax cuts that were set to expire in 2010.
It Wasn't All Due To Legislation
Yup, can't blame the dizzying height of the natilonal debt all on politicians. The recession added to it as well; since individuals lost their jobs, they had no revenue from which to pay taxes so that decreased the government's revenue, heightening the debt. The natural extension of lost wages means less spending on the part of the consumer, which means less revenue for businesses, which means less tax revenue for the government.
What do you think the govenrment should do to reduce the national debt?