Budget Deficit vs National Debt

You may have heard the President has set a goal of "reducing the federal budget deficit to $513 Billion by 2013". What does that really mean? First of all, let's define a few terms.

Surplus: Government receives more money than it spends.

Deficit: Government spends more money than it receives in a given year. In order to do so, it must borrow money (go into debt) and then pay interest on that.

Debt: The total amount of money that the government has borrowed over the years, which it has not yet paid back, and is still paying interest on.

Each year since 1969, Congress has spent more money than its income. The Treasury Department has borrowed money to meet Congress's appropriations. The total borrowed is more than $10,000,000,000,000 ($10 Trillion).

Back to the President....

So President Obama's goal is to get the 2013 annual deficit to $513 Billion. Reducing the annual deficit merely slows the pace at which we are adding to our debt. He still plans to spend $513 Billion more than the government will receive in 2013.

This also does not affect the huge deficit incurred this year (at least $1.3 Trillion), or those he will incur in 2010, 2011, or 2012.

For perspective, before now our largest deficit ever was $455 billion in fiscal 2008. Therefore Obama's goal for fiscal responsibility is to have a bigger deficit than any previous Administration's deficit.

By the end of 2009, our national debt will be at least $12.1 Trillion. There is no way to pay that off unless we begin to run budget surpluses.