Wednesday, February 25, 2009

Deficit vs. Debt

Lately I have been involved in several discussions about the National Debt and how it is very worrisome for many people.

When I comment that I am not at all worried about that right now, it makes people cock their head to the side and look at me like I am crazy.

So here is why. The federal budget deficit is what I worry about and what I really think everyone should be concerned with.

Think of the federal budget as your check book and the national debt as your credit card. You are paying for a lot of things with your check book, medicare, the Iraq war, state funds for education and infrastructure etc…. Lately you got some extra expenses (Iraq war) and took a pay cut (tax credits) so you can’t afford to pay all of your bills with your checkbook (federal budget). So you have a deficit and you have to use your credit card (national debt). This has been going on for quite a while so your credit card is about to be maxed out…oh and don’t forget all that interest you have to pay.

And as long as that checkbook stays in the negative you will have to conintue to use that credit card.

So the point I am trying to get across is that there is no point in even talking about the National Debt until the federal budget deficit is corrected.

Another reason I like President Obama is that he gets this.

"WASHINGTON – President Barack Obama has committed hundreds of billions of dollars to help revive the economy and is working on a plan to cut the federal deficit in half by the end of his first term."

He believes the budget deficit should still be tackled despite the need to spend money to stimulate the economy. The president has inherited an enormous deficit from his predecessor. The interest being paid this year on the deficit is costing the government about 250 billion dollars, three times what it spends annually on education.

The next couple of blogs will tackle what actually comprises the National Debt....where do we get all of that money!!!!!!!
Then I will talk about the stimulus package and how it is possible to actually get the budget deficit under control while still spending 700 billion on a stimulus package.


Scott said...

I am staying tuned for more info. You have a really good way of explaining this economic "stuff" Scarletta. Ever thought of being a prof??? :-)

Scott said...

Okay, I am waiting for another economics lesson. I am trying to get my head wrapped around the fact that the government has stepped in, yet again, and given AIG another lump sum (in the billllllions, mind you, to keep them from going out of business. Since we arleady have a trillion dollar deficit, how in the world are we giving money to anyone. We either have to borrow from someone else or print new money, right? This world is getting crazy Scarletta. Ya know?? ha!