10-26-2022, 08:07 AM
(10-26-2022, 07:50 AM)Belsnickel Wrote: Ah, I see your confusion. You seem to not understand the terminology. Surplus and deficit are terms based on the yearly budget. So in a fiscal year, if your revenues outpace expenses you run a surplus, and if the expenses outpace revenues you run a deficit. Or, you could somehow pull off a balanced budget which never really happens where they are equal.
If you run a deficit, you have to get that money from somewhere, and that is where the debt comes into play. The debt is the accumulation of deficits over the years. So when you run a deficit, you are adding to the debt by the amount of the deficit. For the government, this is done through bond issuances primarily (many of which are purchased by Social Security and some by foreign entities, but most of our debt is held by the US). If you run a surplus, you could use it to pay down debt. Or, more typically from the fed and the states, they will just spend it on something else. Sometimes states put it into a "rainy day fund," or they may give money back to the people (Virginia did that this year), it all depends.
A lot of focus is put on the debt but the reality is that our national debt is not as big of an issue as a lot of people think it is. This is one of those things where "running government like a business" just doesn't work out. Because of our economic capacity our debt is absolutely fine and deficit spending is not a huge boogeyman, or at least not as much as the narrative would have us believe. As long as we don't default because of political games in Congress, which has come close to happening, we're good. We are capable of paying our bills. However, that doesn't mean we should just spend whatever we like because there is a limit and our spending habits will determine what that is as it can impact our bond ratings and other things that allow us to borrow. We have been continually deficit spending for decades, which is a problem.
Anyway, you are correct that a lower deficit this year than last just means that we added less to the debt this year. But that's just because that's what our politicians focus on. It's a shorter term measure that is honestly more important in the grand scheme of things than the overall debt.
Well considering how much was spent during Covid I’m not sure it’s much of an accomplishment unless it’s lower than pre Covid spending?
![[Image: 4CV0TeR.png]](https://i.imgur.com/4CV0TeR.png)
