Brian Bailey Preface to the Revised Edition

The Confusion Over Debt and Deficits

The more I talk to people about politics, the more I'm convinced that many of us are confused about the differences between our national debt and the budget deficit. The two terms are thrown around casually in political commercials and presidential debates. John Kerry often argues that President Bush inherited trillions of dollars of surpluses and has quickly turned that into trillions of dollars of deficits.

As you can see from the numbers below, in the last 18 years the national debt has gone from 2.4 trillion to 7.4 trillion. For a Republican to be honest, he would have to admit two things. First, nearly all of the national debt has been accumulated while a Republican was president. Second, more debt, as a rule, is not a good thing.

The deficit is the number talked about more often. Kerry and Bush both plan to cut the deficit in half over the next four years. Now, I imagine a fair amount of people hear that and believe they are going to reduce our actual debt. Unfortunately, no. The aggressive plan is to spend $150 billion more than we have each year, instead of $300 billion.

You will also notice that there were four years in a row where there was a budget surplus, something that looks even more historic in the current environment. Again, an honest Republican must give President Clinton some credit for this, though the Republican congress certainly deserves to share in the accomplishment, just as the Democratic congress of the 80's and early 90's shares the responsibility for much of the debt.

But during the four years, the national debt remained the same. Those years produced many 10 year plans filled with projected surpluses and rosy scenarios. Unfortunately, 10 year plans don't take into account stock market crashes and terrorist attacks.

What is my point? First, it's disingenuous to suggest that Bush inherited trillions of dollars. He did inherit a budget surplus, but he's not responsible for 10 year hypotheticals or shocks to our economy that no president could predict.

Second, it's equally disingenuous to suggest that any politician is making "hard choices" when the best case scenario is to go into debt less each year!

Below is a list of the past 18 years of U.S. budget history. You'll find the year, followed by the cumulative national debt at the end of that year, in trillions, followed by the budget deficit for that single year, in billions.

2004   $7.4 T   -$307 B
2003   $6.8 T   -$304 B
2002   $6.2 T   -$158 B
2001   $5.8 T   $127 B
2000   $5.7 T   $237 B
1999   $5.7 T   $126 B
1998   $5.5 T   $069 B
1997   $5.4 T   -$022 B
1996   $5.2 T   -$108 B
1995   $4.9 T   -$164 B
1994   $4.7 T   -$203 B
1993   $4.4 T   -$255 B
1992   $4.1 T   -$290 B
1991   $3.7 T   -$269 B
1990   $3.2 T   -$221 B
1989   $2.9 T   -$152 B
1988   $2.6 T   -$155 B
1987   $2.4 T   -$150 B