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Federal Deficit And The National Debt

Decent Essays
This paper is about the last 15 years of the federal deficit and the national debt, as well as examination their relationship. This paper also looks at how the deficit is created and dealt with, along with what happens to different areas of the economy when the deficit’s size changes. Lastly this paper covers who owns the national debt, how these people are paid off, and the interest rate of the debt.
Federal Budget Deficit with a sprinkle if National Debt (1, 2, 3) The federal budget deficit and the national debt are two different things, but are connected in a parasitic way. The federal budget deficit is when the government spends more than in receives; it is also a flow value, meaning that the amount of the deficit is something that occurs over time (Miller, 2014). The deficit for the past 15 years is shown in Appendix A, and the deficit is the host, not the parasite. The national debt however is the parasite, and it is known as the total value of all federal government deficits minus the amount that the government has repaid. The debt is also a stock value, or something measured at an exact point in time, and its last 15 years appears in Appendix B (Miller, 2014). The reason why the deficit and debt are in a parasitic relationship is because the budget deficit can exist without the debt, like a host does not need a parasite, but the debt cannot live without the deficit. The federal budget deficit comes into existence when the government spends more than it earns
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