Between 2007 and 2011 the federal budget deficit grew from $160.7 billion to $1,299.6 billion, and the national debt grew from $8.9 trillion to $14.8 trillion.  Differentiate the budget deficit...

Between 2007 and 2011 the federal budget deficit grew from $160.7 billion to $1,299.6 billion, and the national debt grew from $8.9 trillion to $14.8 trillion.  Differentiate the budget deficit from the national debt.

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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The difference between the federal budget deficit and the national debt is that one of them is a one-time statistic while the other one is cumulative.  The budget deficit is a yearly statistic while the debt is a cumulative statistic.

Every year, the federal government takes in a certain amount of money in tax revenue.  Every year, it spends a certain amount of money.  Whenever it spends more than it takes in, it runs a budget deficit.  This is analogous to what would happen if you put more charges on your credit card in a month than you paid for.

Over the years, deficits pile up if you do not repay them.  The same goes for credit card debt.  If you keep running a deficit every month on your credit card, you will amass a debt.  If the government runs a deficit every year, it amasses a debt that we call the national debt.  The national debt is the sum of all the deficits that we have incurred along with interest charges and such.  Thus, the debt is a cumulative statistic that is much larger than the deficit, which is an annual statistic.

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