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A question about the National Deficit..?

Okay, I'm just trying to learn more I don't mean to sound ignorant, I don't have a finance/business degree..I'm just a simple person wanting to know more about what our government/President is talking about.

National Deficit- What exactly is the National Deficit? And where are they getting this money from? I know something about spending more in a year than what is allowed. What is wrong with keep borrowing against it, and adding to it? I know in my lifetime, it won't be paid off..but what happens if we keep borrowing and borrowing..and why do they (I don't know who "they" is..) keep letting us take against it?

Thanks for serious answers!

3 Answers

  • 1 decade ago
    Favorite Answer

    Deficit is the amount of money the government spends in a given year that is more than what it takes in.

    Every year we have a deficit, we add to our total debt.

    We get the money by borrowing -- from other countries, from individuals.

    When American individuals and businesses spend less, then government needs to spend more, even though it adds to the debt.

    BUT, when that isn't the case, then we should pay the debt down, as a huge debt hurts the country. When the economy is healthy, people have jobs and so pay income tax, and bussiness pay their taxes, and there aren't huge needs to give money to people with no jobs, then we have surplus.

    Clinton left Bush the Younger with a surplus, but, rather than doing what most Americans wanted him to do, pay down our debt, he wasted it, and created a vastly larger debt. (He cut revenues by slashing taxes paid by the people who have most of the money; and he started wars, and gave huge piles of money to his and Cheney's friends in "no-bid" contracts.

    With luck, we'll recover, and again have surpluses. If voters are smart, we'll elect people who will use those surpluses to pay down the debt.

  • 1 decade ago

    Deficit is spending more than your revenues. Over a relatively short period of time it is not a big problem as many presidents have operated with deficits, e.g., Reagan, Bush, et al. The shortfall is made up in loans. Recently, China has been the country loaning the most as they are a huge trading partner and it serves their interests to keep our economy running. Implementing the right tax and budget policies will wipe out the deficit in relatively short order. However, because we are in a recession it is not the time for the government to tighten spending or increase taxes. Once the economy improves measures will be taken to reduce the deficit. Hope that helps - read Paul Krugman at the NYT for more info.

  • 1 decade ago

    And then they all fall down.

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