deficits & debt
We hear about the deficit all the time - but how bad is it and what, for that matter, is a deficit? Some basics...
Deficit – the deficit is how much more the federal government spends in a given year than it raises in revenue (through taxes, mostly) (Note: we're just talking about the budget deficit here; for info on the trade deficit, see our trade page)
Surplus – a surplus is how much more the federal government raises in a given year than it spends (the opposite of a deficit – happens rarely)
Debt – the total accumulation of past deficits – or, how much we owe. There are two kinds of debt that people talk about:
Issue in Brief
Once again, some lawmakers (led by Senator John McCain of Arizona) are calling for a line item veto for the president to help Congress police its spending habits.
Federal spending has been at an all time high in the last decade, and complaints about a ballooning deficit can be heard from left and right. With a declining economy and unemployment nearing double digits, the government is likely to have a hard time generating enough revenues for everything it wants/needs to pay for without going into even more debt: massive economic stimulus and bailout plans, healthcare, and two on-going wars. Proponents of the line item veto say it will help cut wasteful (pork barrel) spending and special interest projects from budget bills. However, many members of Congress oppose the law because it threatens to expand executive power.
Debt. We’re deep in it – and still digging. Some economists warn that our national debt is growing to dangerous levels and could end up hurting our economy in the short- and long-term. Others caution there’s no need for alarm; the debt is manageable and is even a necessary byproduct of policies designed to boost the economy in sluggish times.
The Week of July 13
The floors of Capitol Hill are busy with spending matters this week. While the House churns through two more of its twelve spending bills for fiscal year 2010 - a $33b Energy and Water bill and $24b for Financial Services - senators will wade into lengthy debate over the $690b defense authorization bill, HR 1390. The "authorization" bill doesn't write the check for the military ("appropriations" bills do that), but it does okay what can go into an appropriations bill for next year. One budgetary item that will slow up passage is a $2b allotment for F-22 fighter planes: the Pentagon says it doesn't need the extra planes; the administration doesn't want to pay for them; but lawmakers in the homestates that build F-22s are pushing to buy them anyway.
Issue in Brief
With the federal government running deficits for the past eight years - and for the forseeable future, fiscal conservatives on the left and right occasionally howl for stricter rules and checks to keep spending under control.
While 2006's Congress was gunning for a line-item veto and talked about setting up sunset rules and an efficiency panel, the 2007 Congress and current Obama administration are hot to pass pay/go rules. More on what all those reforms are about: