# Are we deficit a deficit? **URL:** \ **Category:** Factual Questions\ **Created:** [August 15, 2000, 10:01pm UTC](https://boards.straightdope.com/t/are-we-deficit-a-deficit/29499 "2000-08-15T22:01:49Z")\ **Posts on this page:** 17\ **Page:** 1
**Author:** ![lswote](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lswote/32/5737_2.png) [@lswote](https://boards.straightdope.com/u/lswote)\ **Post date:** [August 15, 2000, 10:01pm UTC](https://boards.straightdope.com/t/are-we-deficit-a-deficit/29499/1 "2000-08-15T22:01:49Z")
I have heard various commercials recently talking about having a budget surplus instead of a deficit. Does this mean we have totally eliminated the staggering deficit that just a few years ago was going to take forever to pay back or does it just mean we currently aren’t going deeper in the hole? I find it amazing we would have been able to payoff the trillion dollar deficit, but would love to think it is true. ---
**Author:** ![Konrad](https://avatars.discourse-cdn.com/v4/letter/k/f475e1/32.png) [@Konrad](https://boards.straightdope.com/u/Konrad)\ **Post date:** [August 15, 2000, 10:04pm UTC](https://boards.straightdope.com/t/are-we-deficit-a-deficit/29499/2 "2000-08-15T22:04:42Z")
The defecit and the debt are 2 different things. The debt is the total amount owed and the defecit is how much it’s increasing each year. ---
**Author:** ![Shagnasty](https://avatars.discourse-cdn.com/v4/letter/s/9dc877/32.png) [@Shagnasty](https://boards.straightdope.com/u/Shagnasty)\ **Post date:** [August 15, 2000, 10:06pm UTC](https://boards.straightdope.com/t/are-we-deficit-a-deficit/29499/3 "2000-08-15T22:06:12Z")
Look up the difference between the “National Debt” and the the budget deficit and get back to us with your report or personal enlightenment. ---
**Author:** ![Necros](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/necros/32/11086_2.png) [@Necros](https://boards.straightdope.com/u/Necros)\ **Post date:** [August 15, 2000, 10:06pm UTC](https://boards.straightdope.com/t/are-we-deficit-a-deficit/29499/4 "2000-08-15T22:06:18Z")
No, it’s supposed to mean that we have eliminated the _yearly_ budget deficit. The big one’s still there. The good news: The big one’s not growing anymore, thanks to our yearly budget surplus. The bad news: Really, it is, because of the way that Congress does accounting, interest on the debt, and concepts such as “off-budget” items. ---
**Author:** ![lswote](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lswote/32/5737_2.png) [@lswote](https://boards.straightdope.com/u/lswote)\ **Post date:** [August 15, 2000, 10:18pm UTC](https://boards.straightdope.com/t/are-we-deficit-a-deficit/29499/5 "2000-08-15T22:18:05Z")
I gotcha. Debt versus deficit. These commercials are hoping others like me don’t know the difference as well. One was for Gore and how we are now in a “budget surplus” situation. The other one was for hospitals. Basically the commercial asked how can we deny more money for hospitals when we now have a “budget surplus”. So, I guess the answer to that one is, until we actually payoff the debt, it should be real easy to deny it. ---
**Author:** ![Punoqllads](https://avatars.discourse-cdn.com/v4/letter/p/d2c977/32.png) [@Punoqllads](https://boards.straightdope.com/u/Punoqllads)\ **Post date:** [August 16, 2000, 12:10am UTC](https://boards.straightdope.com/t/are-we-deficit-a-deficit/29499/6 "2000-08-16T00:10:15Z")
> [@](#): > > \*Originally posted by Wanderer \* > One was for Gore and how we are now in a “budget surplus” situation. The other one was for hospitals. Basically the commercial asked how can we deny more money for hospitals when we now have a “budget surplus”. So, I guess the answer to that one is, until we actually payoff the debt, it should be real easy to deny it. As long as there is money involved, it will never be easy. My T-bone steak could be your sacred cow. ---
**Author:** ![chique](https://avatars.discourse-cdn.com/v4/letter/c/4491bb/32.png) [@chique](https://boards.straightdope.com/u/chique)\ **Post date:** [August 16, 2000, 2:32am UTC](https://boards.straightdope.com/t/are-we-deficit-a-deficit/29499/7 "2000-08-16T02:32:45Z")
…but it is my understanding that debt makes the economic world go 'round. If the national debt were paid off tomorrow it would throw us into chaos. T-bills and treasury bonds would be worthless, for starters, and the banks that hold the loans the government has taken out would go bust due to lack of incoming interest. I don’t know what the GNP or GDP amount to, but I do know that the trillion or so the US is in debt is a relative trifle in comparison. Think of it this way: Married, working couple with well-paying jobs, a mortgage, two car payments, two major credit cards, and 2 or 3 store-brand credit cards. The federal government is no worse off or further in debt than is that married couple. ---
**Author:** ![Punoqllads](https://avatars.discourse-cdn.com/v4/letter/p/d2c977/32.png) [@Punoqllads](https://boards.straightdope.com/u/Punoqllads)\ **Post date:** [August 16, 2000, 3:15am UTC](https://boards.straightdope.com/t/are-we-deficit-a-deficit/29499/8 "2000-08-16T03:15:17Z")
> [@](#): > > \*Originally posted by sandyr \* > …but it is my understanding that debt makes the economic world go 'round. > > If the national debt were paid off tomorrow it would throw us into chaos. T-bills and treasury bonds would be worthless, for starters, and the banks that hold the loans the government has taken out would go bust due to lack of incoming interest. Nyet on the T-bills/bonds issue. If the national debt were paid off tomorrow, it would be by the government buying back the T-bills/bonds, or, at least, not selling new ones when it pays off the currently-held ones. It would cause chaos because of the ridiculously high taxes we’d need to charge to pay it back, slowing down our economy enormously. > [@](#): > > I don’t know what the GNP or GDP amount to, but I do know that the trillion or so the US is in debt is a relative trifle in comparison. Annual GDP: $9 trillion (Yank trillions. That’s $9 thousand million to you Brits out there) Debt: $6 trillion. 2/3 does not a trifle make. Cream, fruit, eggs, angel food cake, **that** makes a trifle. > [@](#): > > Think of it this way: Married, working couple with well-paying jobs, a mortgage, two car payments, two major credit cards, and 2 or 3 store-brand credit cards. The federal government is no worse off or further in debt than is that married couple. Actually, the federal government has it a lot easier than the couple. Factually, the government can never go broke. It can destroy its currency value, driving investors to more stable economies, but if ever it needs a few bucks more, it can always print some up. Also, note that about 20% of our debt is owed to foreign interests, the other 80% is owed to ourselves. In some cases, it’s owed to other federal agencies! My understanding about the national debt is that, as long as it expands slower than GDP growth, and isn’t grossly larger than the GDP, it’s not something to get too worried about. If the US borrows $100 million from itself to create infrastructure resulting in a $200 million gain in annual GDP, that’s a good deal. Reducing the debt in the good times, so you have more room to use deficit spending to boost the economy out of a downturn, though, seems a pretty prudent thing to do. ---
**Author:** ![lswote](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lswote/32/5737_2.png) [@lswote](https://boards.straightdope.com/u/lswote)\ **Post date:** [August 16, 2000, 4:11am UTC](https://boards.straightdope.com/t/are-we-deficit-a-deficit/29499/9 "2000-08-16T04:11:47Z")
But the debt is taking half of our tax dollars to pay out as interest. If we didn’t have to pay that money we would have twice as much tax money or taxes could be cut in half. That is not a trifle. ---
**Author:** ![Punoqllads](https://avatars.discourse-cdn.com/v4/letter/p/d2c977/32.png) [@Punoqllads](https://boards.straightdope.com/u/Punoqllads)\ **Post date:** [August 16, 2000, 5:38am UTC](https://boards.straightdope.com/t/are-we-deficit-a-deficit/29499/10 "2000-08-16T05:38:37Z")
> [@](#): > > \*Originally posted by Wanderer \* > But the debt is taking half of our tax dollars to pay out as interest. If we didn’t have to pay that money we would have twice as much tax money or taxes could be cut in half. That is not a trifle. Yeah, though it’s closer to a quarter than a half of the budget. Which we pay for by selling bonds, which then have interest to be paid off. So we sell more bonds to pay for that interest, which then have interest to be paid off by selling…you get the picture. That’s where the ratio of the debt to GDP is important, as well as the ratio of the growth rates of each. If the government revenue increases faster than the debt interest it’s paying, it’s a net win to sell those bonds. Of course, you also run the risk of stealing away investment from the private sector, which could slow the growth of the GDP. And this assumes an omniscient auditor, able to determine which spending improved which part of the economy, and by how much. So, basically, we’re taking a huge, hairy, nigh-intractable problem; part math, part sociology, part physics, part game theory, and asking voters to decide what the right solution is. The same voters who decided that passing an equal rights amendment would force Disney World to have unisex bathrooms. And we’re not paying ten thousand dollars for a cup of coffee. If you needed any more proof that God looks out for the US, there you are. ---
**Author:** ![mrblue92](https://avatars.discourse-cdn.com/v4/letter/m/5daacb/32.png) [@mrblue92](https://boards.straightdope.com/u/mrblue92)\ **Post date:** [August 16, 2000, 2:11pm UTC](https://boards.straightdope.com/t/are-we-deficit-a-deficit/29499/11 "2000-08-16T14:11:54Z")
> [@](#): > > Factually, the government can never go broke. It can destroy its currency value, driving investors to more stable economies, but if ever it needs a few bucks more, it can always print some up. I’m no economist, but this doesn’t seem quite right. If a government does print an over-abundance of its currency, it can deflate its value to the point of being worthless. At some point, people stop accepting the currency as payment and start using other currencies or hard goods. Your government goes broke, can’t pay its workers, and collapses. But I could be wrong… economic history was never my cup 'o tea. ---
**Author:** ![Punoqllads](https://avatars.discourse-cdn.com/v4/letter/p/d2c977/32.png) [@Punoqllads](https://boards.straightdope.com/u/Punoqllads)\ **Post date:** [August 16, 2000, 6:08pm UTC](https://boards.straightdope.com/t/are-we-deficit-a-deficit/29499/12 "2000-08-16T18:08:11Z")
> [@](#): > > \*Originally posted by mrblue92 \* > > > [@](#): > > > > Factually, the government can never go broke. It can destroy its currency value, driving investors to more stable economies, but if ever it needs a few bucks more, it can always print some up. > > I’m no economist, but this doesn’t seem quite right. If a government does print an over-abundance of its currency, it can deflate its value to the point of being worthless. At some point, people stop accepting the currency as payment and start using other currencies or hard goods. Your government goes broke, can’t pay its workers, and collapses. Right. That’s what I said, in the second sentence: “It can destroy its currency value…” ---
**Author:** ![mrblue92](https://avatars.discourse-cdn.com/v4/letter/m/5daacb/32.png) [@mrblue92](https://boards.straightdope.com/u/mrblue92)\ **Post date:** [August 16, 2000, 6:56pm UTC](https://boards.straightdope.com/t/are-we-deficit-a-deficit/29499/13 "2000-08-16T18:56:27Z")
Yea, but then it would be broke, wouldn’t it? 🙂 Maybe it’s just a sematics argument… ---
**Author:** ![mrblue92](https://avatars.discourse-cdn.com/v4/letter/m/5daacb/32.png) [@mrblue92](https://boards.straightdope.com/u/mrblue92)\ **Post date:** [August 16, 2000, 6:59pm UTC](https://boards.straightdope.com/t/are-we-deficit-a-deficit/29499/14 "2000-08-16T18:59:46Z")
**semantics** , that is… ---
**Author:** ![chique](https://avatars.discourse-cdn.com/v4/letter/c/4491bb/32.png) [@chique](https://boards.straightdope.com/u/chique)\ **Post date:** [August 17, 2000, 12:55am UTC](https://boards.straightdope.com/t/are-we-deficit-a-deficit/29499/15 "2000-08-17T00:55:54Z")
I **SAID** I wasn’t an economist Guess I proved it too, eh? But what about my first sentence? Isn’t this part: > [@](#): > > \*Originally posted by sandyr \*…but it is my understanding that debt makes the economic world go 'round. true? And what about this bit? > [@](#): > > …the banks that hold the loans the government has taken out would go bust due to lack of incoming interest. ---
**Author:** ![tomas](https://avatars.discourse-cdn.com/v4/letter/t/439d5e/32.png) [@tomas](https://boards.straightdope.com/u/tomas)\ **Post date:** [August 17, 2000, 1:44am UTC](https://boards.straightdope.com/t/are-we-deficit-a-deficit/29499/16 "2000-08-17T01:44:21Z")
Annual GDP: $9 trillion (Yank trillions. That’s $9 thousand million to you Brits out there) WHAT? ---
**Author:** ![Punoqllads](https://avatars.discourse-cdn.com/v4/letter/p/d2c977/32.png) [@Punoqllads](https://boards.straightdope.com/u/Punoqllads)\ **Post date:** [August 17, 2000, 2:05am UTC](https://boards.straightdope.com/t/are-we-deficit-a-deficit/29499/17 "2000-08-17T02:05:00Z")
> [@](#): > > \*Originally posted by tomas \* > Annual GDP: $9 trillion (Yank trillions. That’s $9 thousand million to you Brits out there) > WHAT? Gah. 1 billion UK == 1 trillion US. Good catch. [sub]I will proofraed my posts. I will proofraed my posts. I will…[/sub]