Suzy, ok here is the explanation.
Since based off your posts I know you don't full understand this. And that is not your fault. This is not something that is taught normally and most news channels/ shows, regardles if it is "faux news" or "Juan stewart", will not explain so many americans believe then to be one in the same.
A budget deficit is the amount by which the federal government's outlays exceed its revenue in a given year.
The National Debt is the federal government's total indebtedness at a moment in time. It is the accumulation of previous deficits plus outstanding interest.
The difference is the same as the difference between flows and stocks. An analogy is to think of water filling into a pool. The rate at which the water is pouring out of the spicket is comparable to the budget deficit. The total amount of water in the pool at any point in time is the national debt. How much debt are we in? Currently, we have approximately a $9 trillion national debt. This amounts to 40,000 dollars per person living in the U.S. Roughly that is.
In 2007 the federal budget deficit was 163 billion dollars.This is just 1.2 percent of the economy. As a percentage of the economy, the deficit is now lower than the average of the last forty years. Tax cuts work to promote economic growth, and that economic activity brings in higher revenues to the Federal treasury. This year tax revenues grew by $161 billion to reach $2.568 trillion, the highest level of Federal revenues ever recorded. That's an increase of 6.7 percent. And it builds on the 14.5 percent and 11.8 percent increase in revenues during the last two years.
Now more information for you to think about. A myth regarding the national debt. And why the "panic" behind them is not needed.
THE DEFICIT IMPOSES A MAJOR BURDEN ON FUTURE GENERATIONS
This was a major theme of Ross Perot when he was running for the Presidency in 1992, and the democratic party and even republicans of today. There is some truth to this statement, but not much. This statement conjures up an image that the younger generations has this huge tax bill hanging over their heads which must be paid off entirely. But countries never die (or at least they never plan on dying). Therefore, there is no reason why our children and their children's children cannot keep passing on the debt forever. In fact, so long as the economy continues to grow, future generations can continue to pass on ever-larger debts. Simarlarly, if I lived forever, I would never have to pay off my credit card debt entirely - just service the monthly interest payments.
Moreover, payers and recipients of the debt are both primarily U.S. citizens, so income is simply redistributed from one group to another. Suppose someone was elected President and decided to pay off the national debt once and for all over a period of say, 5 years. How would he do it? He would have to raise taxes and cut spending so that we ran significant surpluses (on the order of $2 trillion per year). The government would then take the funds directly from the tax payers and indirectly from the citizens who lose the benefits they used to receive from government services, and pay off the bond holders. Does the money leave the country? No. It is simply transferred from all tax payers to the bond holders. In fact, many bond holders may find that the value of their bonds were offset by the higher taxes and/or lower level of government services.
There is one case where the net burden argment may hold some weight. Right now, about 40% of US debt is held by foreign investors. To the extent that future generations must pay off this debt, and the income leaves the country, future generations are burdened with the current generation's run-up in debt. Fortunately for the US, dollar is weak right now compared to past years and until it strenghtens those foreignb countries that own thee portion of the debt would lose money if they chose be paid back for it and stand to actualkly make money by allowing us to make our payments. It is like a
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company with a 30 year loan. 200,000 dollar house at the end of 30 years becomes a 1.2 million dollar pay off. which would you take? 200,000 now or over the coure of 30 years receive 1.2 million?