Someone explain deficit versus debt.

[agent00f]

And yet the Pentagon goes bankrupt every god damn year, and then gets refunded by the hundreds of billions.

It's almost like the welfare (lowercase w) of the American people takes a back fucking seat to funding the military industrial complex who just so fucking happen to profit. Every. Quarter. Without. Fail.

In fairness funding the military industrial complex is also public Welfare, poorly spent as it is and mostly to the red states, so the two aren't necessarily mutually exclusive.

 

[Darwin333]

It wasn't spent, it was invested. That is the catch. SS plans to spend it, but hasn't yet.

If you move money from your wallet into your savings account, it isn't debt (it is an investment, although with today's interest rates it is a bad investment). Even if you plan to spend the money from your savings account, it still isn't debt. Same thing when you move money from your savings account into your wallet--that isn't debt either. But the way some people look at the government, moving money from your wallet into your savings account IS debt that your savings account owes your wallet. That is just silly accounting.

Bullshit it wasn't spent, otherwise it wouldn't be intragovernmental debt.

A more accurate analogy would be if I moved money out of my retirement fund and spent it but wrote myself an IOU.

 

[Darwin333]

And yet the Pentagon goes bankrupt every god damn year, and then gets refunded by the hundreds of billions.

It's almost like the welfare (lowercase w) of the American people takes a back fucking seat to funding the military industrial complex who just so fucking happen to profit. Every. Quarter. Without. Fail.

Social Security has been predicted to be 25 years from insolvency for the past 35 years.

It's fine.

Thanks for the concern!

Social Security, with a few minor tweaks, is mathematically sound for the foreseeable future. IMHO the reason it's talked about so much is to distract from the actual problem which is Medicare and Medicaid.

 

[Svnla]

Speaking of SS, these lies - http://www.cheatsheet.com/money-career/social-security-lies.html/?a=viewall

 

[fskimospy]

Bullshit it wasn't spent, otherwise it wouldn't be intragovernmental debt.

A more accurate analogy would be if I moved money out of my retirement fund and spent it but wrote myself an IOU.

Right, but do you care if you pay you back?

 

[Atreus21]

We're always witnessing history. That's how history works.

The past just ain't what it used to be.

 

[Darwin333]

Right, but do you care if you pay you back?

Well since it's from my retirement account I do but it's a valid point that we can simply change how much we decide to pay.

 

[momeNt]

Considering the fact that our money is created out of debt, if we had no debt, we would have no money. Government creates money via spending, deletes money via taxation. A balanced budget would mean that zero net new money entered our economy, maybe a good thing maybe a bad thing.

It's best to understand that debt at personal / state levels is completely different than debt at the federal level when you are in charge of your currency.

 

[glenn1]

Debt is the current net value how much money you owe. Deficit represents the change in the amount of that debt over a time period (typically a year) that is caused by the net difference between your income and spending over that time period.

E.g. I owe $10,000 in debt (mortgage, credit cards, etc). Last year I earned $100,000 in salary and had $110,000 in expenses; the net $10k which I spent more than I earned is termed a "deficit" and adds to my existing $10,00 in debt giving me $20k total debt. This year I earned $105k and spent $100k, thus I have a balanced budget and leaving my debt unchanged (disregarding interest payments for now). Two years from now I earn $110k and only spent $105k and thus had a $5k surplus (alternatively, a "positive deficit") which reduces my debt outstanding from $20k to $15k.

 

[agent00f]

Well since it's from my retirement account I do but it's a valid point that we can simply change how much we decide to pay.

The takeaway is that they're obviously different things so it makes little sense to account for them the same.

 

[guachi]

My guess on what was happening appears to have been correct. Here is an excerpt from a WSJ article about this effect from last year. The numbers are different but they are describing basically the same effect.

The quote came from this article: http://blogs.wsj.com/economics/2015...y-is-the-debt-rising-faster-than-the-deficit/

“How can Treasury claim a $2 billion surplus in December and yet need to borrow $101 billion from the public in December?”

We saved the best and most complex question for last. Several astute readers noticed that the government’s reported deficits do not align with the total amount of debt outstanding. (The Treasury reports the total debt to the penny daily on its website.) For the month of December, the government borrowed $101 billion from the public, but reported a $2 billion surplus.

It might seem that the deficit ought to equal to the change in outstanding debt. The explanation is wonky and a bit long, but there’s nothing sinister about the deficit not adding up the same as the debt from one month to the next.

First, the Treasury doesn’t spend every dollar it borrows. It also maintains an operating cash account. This alone explains most of December’s apparent discrepancy. The Treasury started with about $108 billion in cash. Over December it ran a $2 billion surplus and borrowed $101 billion from the public. That extra money didn’t disappear through accounting shenanigans. The Treasury just held onto the extra cash. At the end of December, the Treasury had $223 billion in cash.

After accounting for cash, the discrepancy in December was small, and is explained by little changes across Treasury’s several dozen other financial accounts, which include obscure assets like securities in the National Railroad Retirement Investment Fund, accounts at the International Monetary Fund, Special Drawing Rights, etc.

What about the change over all of calendar year 2014? The Treasury reported deficits of $488 billion but borrowed $668 billion. What happened with the other $180 billion? Again, cash explains part of it. Cash rose from $162 billion to $223 billion. That’s $61 billion accounted for and $119 billion unexplained.

What else does the government do in addition to spending and accumulating cash? It issues loans. The government’s loan financing climbed by $118 billion over the course of 2014. With lending programs, the government borrows from the public and turns around and lends out that money. (Most direct lending from the government is for student loans, but the departments of transportation, agriculture and energy, the Small Business Administration and the Export-Import bank all have significant lending programs too.)

 

[Svnla]

http://finance.yahoo.com/news/either-candidate-discuss-issues-deserve-165119067.html