In a discussion about how one news organization had reported about the national debt, a columnist wrote that one issue was Republican policies of cutting taxes and increasing military spending: “Both Bush administrations compounded the debt problem by continuing both policies. The Obama deficits are the product of the lowest federal tax revenue (as a percentage of GDP) since 1950, continued military spending, and huge expenditures to combat the 2008 economic crisis.” (Emphasis added.)
All of that may be true, except for the conflation of “debt” and “deficit.” They are not the same thing–though, every time the government comes close to a shutdown, or politicians talk about the money the government owes or spends, someone mixes up those terms.
The federal “deficit” is the difference between how much the government takes in that fiscal year, through tax revenues and other means, and how much it spends. Since 1789, according to a spreadsheet from the Office of Management and Budget, the government has operated at a deficit for all but 25 fiscal years, most recently in FY 2001; for 2016, the “deficit” is expected to be about $475 billion.
The “deficit” itself leads to “debt,” because the government has to borrow the money to make up the shortfall, by issuing Treasury bonds and bills and other securities. That cumulative borrowing is what makes up the “national debt.” Right now, it stands at about $18 trillion, and is expected to rise another $6 trillion or so in the next 10 years.
The “deficits” include payments against the “national debt,” so it’s a like a vicious cycle: You need to add money to the budget to pay for the debt you already have, which means you go deeper into debt. Which is what many of us do during holiday season.