Anonymous asked in Social ScienceEconomics · 1 decade ago

What does it mean when our nation has a deficit?

I know we are like trillions and trillions of dollars in debt....but how do we manage to pay for this stuff? When the government runs out of money do they just print more? Can't we just pump more money into our economy if we are in debt? Or can't we just reset our debt? I don't get it seems like there is so much more we can do to help our problems out. Does anyone get what I'm saying?


Thanks wonky but why can't we just wipe out our deficit? The government has that power right? Just to do whatever they want.

Update 2:

OK but answer the second part why can't we just wipe out our debt and start over!?!?!?

8 Answers

  • Anonymous
    1 decade ago
    Favorite Answer

    Its not so simple. The deficit (nation's deficit) and debt are two different thing. Let's start with the deficit. The deficit is when the government is spending more than its receiving (in taxes and all). Debt is somewhat different. The debt is caused by deficit. To make it clear, the debt is consisting of annual additions to the deficit. For example, let's say nation A had a 300,000,000 deficit in its first year. In its second year it had 100,000,000 more deficit. So, its debt would be 400,000,000. The US debt is the same, except on a much larger scale. Its debt has grown for a long time (long before you and I and anyone else posting here was born). Since we've been in deficit and more deficits for so long, our debt has built up.

    Before we can start repaying the debt (also known National debt), we have to cut down our deficit first. Why? Because if we spend so much to pay down our debt, it would make us go into a deficit. I know that sounds confusing so let me try to make it more understandable--

    We are currently in a high deficit. Anymore spending we do- even if it is used to pay our debtors- will INCREASE our deficit. Why? Because we will spend MORE (yes EVEN MORE) than we do now, and currently we spend more than we take in. Sure, we could pay down our $9 trillion debt. But by spending $9 trillion, we'd be increasing our deficit by that much.

    So, first things first. Pay down the deficit first. Raise taxes. They'll have to raise them on the rich. Work towards a good and responsible end to the Iraqi war- not by withdrawing in a certain time, but my stabalizing. WOrk with the military leaders on the ground to strengthen Iraq and work with them on leaving the country in a safe manner after we make it safe. Evaluate our spending. Medicare may need some reform b/c we spent so much on it. Look at our spending and reduce it- cut down any unneeded, over spending. By doing this, we can cut down our deficit. We can increase the money WE take (revenues) IN. Then we can cut our spending. After a few years or maybe 2 terms of a President, we can end our deficit. Then we can build a surplus.

    Then, we can start repaying our debt. But we have to do it with care. We can't repay too much or risk driving ourselves into a deficit. Like I said before, any amount we spend will have to be subtracted from the money we take in. That is how we repay a debt. Fiscal responsible. First reduce the deficit and unnecessary spending. Stop the deficit. Then repay the debt.

    Taxes will have to be raised. But they should only be raised on the rich b/c they can best afford it and their wealth has risen.

    It will take a long while to repay our debt. And no we can't just reset our debt-- other countries (different countries are ones we owe money to, that's where we get money now, from other nations) won't let us forget our debt to them like that. Gradual efforts will be needed and a fiscally responsible manner will have to come.

    Source(s): And enough bashing of the candidates here. Obama's plan will raise more revenue.
  • 5 years ago

    Thank you. And as a couple of the answers show, they didn't read it or didn't understand it. Economics for most is a tricky subject. Most folks look at it as a Snapshot in time. Like we can directly compare point A to point B. Economics is also not an easy discussion topic. Folks who talk about the National Debt think it's like a Credit card and how much you owe. It is actually based on a method of forecasting used first by the Ancient Greeks, then the Romans. It is NOT a tool to measure "How much we owe". Borring from China? Actually they Borrow from the U.S. when they buy our Securities and Treasuries. Again, there is no "Easy, MTV" version as people want to know about today. As such, most discussion on the Economy and what folks say is rather amusing. Quoting figures that have nothing to do with subject they refer to. For the guy who asked "What does 47 million houses in the last 27 years mean". How can you have a conversation with someone who dosn't understand jobs, and a strong Economy? Good work.

  • 1 decade ago

    When the government runs out of money they can't just print more because all that does is makes the value of a dollar completely worthless. What makes a dollar valuable in the first place is that it is backed by gold. We can't just print more money without the gold to back it. What do you mean by "reset our debt?" You can't just wave a magic wand and all is forgiven that is not how it works in real life. "how do we manage to pay for this stuff" by going into more debt.

  • Anonymous
    1 decade ago

    It means that we are spending more than receiving in revenue. So if the Defict is $500/billion, we might have received $3/billion in taxes and spent $3.5/billion. Thus forcing the nation to issue $500/billion in debt to make up the shortfall..

    Kinda like spending more than your paycheck and putting the over amount on a credit card.

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  • 1 decade ago

    alright bro the deficiet means we spent more then we taxed we spent more then we have so the more these liberals (obama) say universal healthcare this will bring us farther into jeopardy....... ok we cant just print more money that would cause super or hyperinflation and will make the dollar value virtually useless understand? we are now borrowing money from china...... yeah dumb idea..... but we can vote for not just the two party system but we need to learn to branch out to other partys like libertarian. they are for small government which will reduce the federal spending and lower the national deficit.

    Source(s): im a libertarian and i hate socialist governments like ours....
  • Anonymous
    5 years ago

    For the best answers, search on this site

    This article omitted the #1 factor in our spending since Bush got what he wanted: a war with Iraq. We cannot have a blind spot and say that all these billions spent on Iraq don't count as spending and don't deepen our debt. My question to Republicans is: "Who's to pay for this war?" Every time the neo-cons criticize the Dems for being tax and spend but they don't see anything wrong with "borrow and spend" Again, who's going to pay for this war? You give tax cuts to the super rich; shouldn't those with the most property to protect pay for the protection? Wasteful spending is crazy on all sides, but too often the GOP treat education as "wasteful spending." As a teacher, I'm a Democrat and I don't hear any intelligent reasons to be otherwise. By the way, the media is very moderate in my opinion, except Fox News, which are avoiding the topic of who's going to pay for this war.

  • 1 decade ago

    It means you spent more than you taxed people

  • basically means we spent more money than we earned or took in... that about as uncomplicated as i could make it

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