1. Budget Deficits and the National Debt

2. The Budget Balanced Budget: Budget Surplus: Budget Deficit:
When revenue equals spending
Budget Surplus:
When the government takes in more than it spends
Budget Deficit:
When the government spends more than it takes in

3. Why can’t the government just print more money?
Creating more money creates more . . .
Demand
As Demand starts to reach its maximum, creating more money just creates . . .
Inflation
If you continue this will cause . . .
Hyperinflation

4. An Example You’ve Heard Before
Pretend the total amount of money in the economy is $100 and we are already at 100% demand.
Pretend the price of a loaf of bread is $1.
Remember: How do prices get set?
Now we print another $100 and give it to the people.
Demand hasn’t changed.
Supply hasn’t changed.
To accommodate the new money all prices will double. In other words, the price of a loaf of bread will now be $2 (INFLATION!)

5. So if we can’t print it, how does the government get more money?
Borrowing Money
Through Treasury Bonds, Treasury Notes and Treasury Bills (Securities)
Of course borrowing too much puts us in debt

6. National Deficit vs National Debt
The difference between revenue and expenditures in one year.
Nation Debt:
The total of all unpaid debts for all years

7. Problems with the National Debt
The greater the debt, the larger the Mandatory portion of the budget becomes
And therefore the smaller the discretionary portion becomes
Thus the more money tied up in debt, the less money there is to use in the economy
How much do they spend every year on interest payments on debt?
At the beginning of the 21st Century, the Federal Government paid out $250 billion dollars a year servicing debt

8. Keynesian View of Debt
Using fiscal policy to affect the economy is more important than worrying about debt.
So, if we have to go into debt, so be it.
However, going into debt should be a short-term situation.

9. Do We Always Run at a Deficit?
When was the last year we had a surplus?
2000, we had a surplus of $236 Billion.
Note: Just because we had a budget surplus in 2000, does NOT mean we were out of debt.
It just means we operated at a surplus for that year.

10. So What is the National Debt Today?
As of 05 Mar 2009 at 05:31:48 PM GMT, the National Debt is:
$10,950,566,432,412.55
The estimated population of the
United States is 305,760,363.
So each citizen's share of this debt is
$35,
The National Debt has continued to
increase an average of $3.71 billion per day since September 28, 2007
As of 28 Sep 2007 the National Debt is:
$8,996,569,252,678.20
The estimated population of the United States is 303,108,129
So each citizen's share of this debt is
$29,
The National Debt has continued to increase an average of $1.35 billion per day since September 29, 2006!
Facts from:

11. Maxing Out the National Debt Clock
October 09, :14 AM ET