Someone explain deficit versus debt.

[Darwin333]

Ok, according to the Treasury Department, the federal deficit totaled $439 billion in FY 2015, that's how much we borrowed and spent that we didn't collect in revenue. Yet the actual debt numbers do not show that at all. Per treasurydirect.gov:


----------------------Debt held by public---------intergovernmental debt----------Total debt
09/30/2015-----13,123,847,198,347.81--------5,026,770,468,136.52--------18,150,617,666,484.33

----------------------Debt held by public---------intergovernmental debt----------Total debt
09/30/2016-----14,173,423,516,895.82------5,400,021,197,040.97---------19,573,444,713,936.79


So we actually increased the debt held by the public by $1.049 TRILLION and intergovernmental debt by $373.25 billion. The intergovernmental debt is 2/3 of what our total stated deficit is but the debt held by public really doesn't make sense. How did we add an additional trillion dollars to the actual debt that we owe other people but run a deficit that is well below half of that? Did we stick half a trillion dollars in a bank account or something so it's still sitting on the books. Also, why isn't intergovernmental debt included in the deficit numbers, it's still money that we have to pay back so why does borrowing it from ourselves not count? If we go by the treasury's numbers on how much we actually borrowed the deficit would be almost $1.4 trillion yet the same treasury claims the deficit was less than a third of that. Are there legitimate reasons that I am not seeing, is it accounting games to make the numbers look better than they are, hundreds of billions in limbo or something?

Someone please help me with the math and how those two numbers are so far off, thanks in advance.

A side note, I guess it is theoretically possible that at some point we will run a surplus and be able to pay back intergovernmental debt without borrowing from the public but that is frankly a pipe dream. That is especially true considering the very large increases we are seeing to Medicare/Medicaid spending which rose 9.3% in FY2015 to $1.4 trillion combined. Hypothetically if we continue to see 9.3% increase in spending on just those two budget items they will cost $2 trillion dollars in just 4 years, an increase to our budget of $600 billion dollars and the math just gets worse going forward from there.

Treasury direct link for fiscal year 2015 if anyone wants to check for themselves.
http://treasurydirect.gov/NP/debt/s...tYear=2015&endMonth=09&endDay=30&endYear=2016

Disclaimer: Not a Trump or Hillary supporter.

 

[overst33r]

Interest?

 

[Mai72]

America doesn't produce anymore. At one time we were inventors. We had factories. Many people were middle class and they were contributing members in their cities. They paid their taxes and bought things.

People still do this but the numbers are dramatically shrinking. There are many people who are on welfare or who have multiple jobs making $10 an hour. Barely surviving, they pay less in taxes. They contribute less and expect the government to take care of them.

We have people who work for the government and expect to retire at 45. They game the system. Do as little work as possible. Again, they expect the government to take care of their medical needs as they get older. Zero gratitude. Just give me becauae I deserve it.

Both groups are leeches on society. IMO, Medicade, Medicare and social security are ticking time bombs. I expect that we are going to have a very difficult time reigning in our deficit unless the politicans are willing to make the hard choices. But, they will not until they are forced to do so. I live in NJ. Our gas tax went up 23 cents. They say that we don't have the funds to fix the roads. Bullshi*t. Much of our money is misappropriated and misused. I don't trust the government and I'd look for every attempt to rip off the IRS legally. That's for another story.

 

[MomentsofSanity]

Instead of typing.

http://www.forbes.com/sites/stancol...reases-by-more-than-the-deficit/#ecf043381f03

I cut out the explanation of deficit. The rest is the important part.

But even though the budget only shows the expected losses, the government still has lend the full amount cash of the loans being extended. The table shows that amount is $126 billion for direct and $26 billion for guaranteed loans. Add the $120 billion for similar transactions (“net change in other financial assets and liabilities”) and the increase in federal borrowing for just this deficit-unrelated category is $271 billion.

Add the $271 billion to the $649 deficit and the total borrowing from the publicis $920 billion.

But there’s more. Federal trust funds and other programs that run a surplus are required to invest those funds in U.S. Treasury securities. That means the government must borrow the funds even though it doesn’t need them to finance the deficit. As shown in the table, this was projected to be $245 billion.

That makes the total increase in the national debt $1,165 billion even though the deficit was projected to be $649 billion.

 

[Victorian Gray]

America doesn't produce anymore. At one time we were inventors. We had factories. Many people were middle class and they were contributing members in their cities. They paid their taxes and bought things.

Apparently you do not know that the US is still the 2nd largest manufacturing country in the world. It's also, as I recollect, the second largest exporting country in the world.

 

[FelixDeCat]

Deficit is annual. Debt is cumulative.

 

[Mai72]

Apparently you do not know that the US is still the 2nd largest manufacturing country in the world. It's also, as I recollect, the second largest exporting country in the world.

We do, but that hasn't translated to a derth of good paying manufacturing jobs. That's why many Americans are working in the service industry. The requirements to work in manufacturing have greatly changed. Much of the low lying fruit is gone and has been replaced by highly skilled technicians. Or, much of it is automated.

Go look at middle America. Many towns have been devastated when the manufacturing plants closed up for good.

 

[Darwin333]

Deficit is annual. Debt is cumulative.

Well yes, but this is the annual increase in the debt for the fiscal year 2015.

 

[Darwin333]

Instead of typing.

http://www.forbes.com/sites/stancol...reases-by-more-than-the-deficit/#ecf043381f03

I cut out the explanation of deficit. The rest is the important part.

Ok, the loans part makes complete sense and does shed some light on the discrepancy. I don't really get the part about being forced to borrow intergovernmental funds that it can't use as obviously it does need and can use the money because it is continuing to add to the public debt.

 

[sdifox]

We do, but that hasn't translated to a derth of good paying manufacturing jobs. That's why many Americans are working in the service industry. The requirements to work in manufacturing have greatly changed. Much of the low lying fruit is gone and has been replaced by highly skilled technicians. Or, much of it is automated.

Go look at middle America. Many towns have been devastated when the manufacturing plants closed up for good.

Cuz Americans have moved from Flintstones to Jetsons?

 

[zinfamous]

We do, but that hasn't translated to a derth of good paying manufacturing jobs. That's why many Americans are working in the service industry. The requirements to work in manufacturing have greatly changed. Much of the low lying fruit is gone and has been replaced by highly skilled technicians. Or, much of it is automated.

Go look at middle America. Many towns have been devastated when the manufacturing plants closed up for good.

that isn't a US issue, it is a progress issue. Those jobs are steadily being replaced by robots wherever you find these factories. The fact that US robots or Chinese or Indian robots produce the world's goods now and forever into the future means that this sector is pretty much eliminated from the labor force, and the writing has been on the wall for decades. Also, economies adapt and yes--those service industry jobs are going to be steadily automated as well. You see it in airports and malls everywhere you go now--cafes completely run by iPads, vending machines selling you useless electronic doodads.

Hey, I wonder whatever happened to all those horse carriage drivers and cobblers and blacksmiths and chimney sweeps and gas lighters and immigrant meat packers. Coal miners. Will you weep for those poor souls that lost their jobs due to the industrial revolution, electricity, the assembly line? Should we just, go reverse technology for the sake of preserving obsolete labor?

 

[bshole]

Apparently you do not know that the US is still the 2nd largest manufacturing country in the world. It's also, as I recollect, the second largest exporting country in the world.

It used to lead in those two categories by an extremely wide margin. China is in line to become a power unrivaled in human history. We are witnessing history.

 

[MagnusTheBrewer]

If you owe a million, you have a deficit. If you owe a hundred, you have a debt.

 

[alcoholbob]

^

Seems like our Congress is helping them too, especially with the prohibition of cooperative space endeavors, forcing the Chinese to build their own space stations. A lot of analysts are musing that China will back on the moon before us, setup a permanently outpost, and likely the first to land humans on Mars. Seems like the entire U.S astronautical aspirations these days are reduced to "hopefully Elon Musk doesn't go bankrupt."

 

[zinfamous]

It used to lead in those two categories by an extremely wide margin. China is in line to become a power unrivaled in human history. We are witnessing history.

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

 

[dullard]

Instead of typing.

http://www.forbes.com/sites/stancol...reases-by-more-than-the-deficit/#ecf043381f03

I cut out the explanation of deficit. The rest is the important part.

MomentsofSanity nailed it. Basically we borrowed more than we needed to borrow. So, our total debt went up more than our total deficit.

It is as if you earned $1000 in a week, borrowed $100 to cover bills you thought you would have to pay, but only spent $1075 of the total. You only needed to borrow $75, but you had borrowed $100 instead. So, your bank balance goes up that other $25 that you didn't need to borrow. Your debt went up $100, your bank balance went up $25, and your deficit was $75. Three different numbers, but they all make sense if you realize that you don't always borrow to the penny exactly what you need.

The key is that the government doesn't have the ability to store large amounts in a bank account. It can't store that $25 that you would in your bank. By law, we have to put that extra into securities. Thus, instead of calling it a $25 higher bank balance, we call it a $25 intergovernmental loan. Think of it as if you can't put that $25 into your bank account, you have to put it into your joint account with your spouse.

 

[fskimospy]

What is your question? Intragovernmental

Ok, according to the Treasury Department, the federal deficit totaled $439 billion in FY 2015, that's how much we borrowed and spent that we didn't collect in revenue. Yet the actual debt numbers do not show that at all. Per treasurydirect.gov:


----------------------Debt held by public---------intergovernmental debt----------Total debt
09/30/2015-----13,123,847,198,347.81--------5,026,770,468,136.52--------18,150,617,666,484.33

----------------------Debt held by public---------intergovernmental debt----------Total debt
09/30/2016-----14,173,423,516,895.82------5,400,021,197,040.97---------19,573,444,713,936.79


So we actually increased the debt held by the public by $1.049 TRILLION and intergovernmental debt by $373.25 billion. The intergovernmental debt is 2/3 of what our total stated deficit is but the debt held by public really doesn't make sense. How did we add an additional trillion dollars to the actual debt that we owe other people but run a deficit that is well below half of that? Did we stick half a trillion dollars in a bank account or something so it's still sitting on the books. Also, why isn't intergovernmental debt included in the deficit numbers, it's still money that we have to pay back so why does borrowing it from ourselves not count? If we go by the treasury's numbers on how much we actually borrowed the deficit would be almost $1.4 trillion yet the same treasury claims the deficit was less than a third of that. Are there legitimate reasons that I am not seeing, is it accounting games to make the numbers look better than they are, hundreds of billions in limbo or something?

Someone please help me with the math and how those two numbers are so far off, thanks in advance.

A side note, I guess it is theoretically possible that at some point we will run a surplus and be able to pay back intergovernmental debt without borrowing from the public but that is frankly a pipe dream. That is especially true considering the very large increases we are seeing to Medicare/Medicaid spending which rose 9.3% in FY2015 to $1.4 trillion combined. Hypothetically if we continue to see 9.3% increase in spending on just those two budget items they will cost $2 trillion dollars in just 4 years, an increase to our budget of $600 billion dollars and the math just gets worse going forward from there.

Treasury direct link for fiscal year 2015 if anyone wants to check for themselves.
http://treasurydirect.gov/NP/debt/s...tYear=2015&endMonth=09&endDay=30&endYear=2016

Disclaimer: Not a Trump or Hillary supporter.

It's not 'intERgovernmental debt', it's 'inTRAgovernmental debt'. ie: money the government owes to itself. It is not counted towards US debt and it should not be counted towards US debt because it is simultaneously an asset and a liability so it cancels out. When the government takes in more money for social security than it pays out it is obligated by law to place that money in US treasuries, which accounts for most intragovernmental debt. Debt held by the public is a contract where the US government is obligated to pay X dollars at time Y or else default. Intragovernmental debt has no such requirements (how would you default on a loan to yourself), therefore is not debt that must be repaid in the same fashion. This is mostly an accounting fiction that relates to future expected Social Security outlays. Some people try to claim that this represents debt like debt held by the public, but that's definitely wrong as the government has the ability to change social security benefits to whatever it wants.

 

[Mai72]

that isn't a US issue, it is a progress issue. Those jobs are steadily being replaced by robots wherever you find these factories. The fact that US robots or Chinese or Indian robots produce the world's goods now and forever into the future means that this sector is pretty much eliminated from the labor force, and the writing has been on the wall for decades. Also, economies adapt and yes--those service industry jobs are going to be steadily automated as well. You see it in airports and malls everywhere you go now--cafes completely run by iPads, vending machines selling you useless electronic doodads.

Hey, I wonder whatever happened to all those horse carriage drivers and cobblers and blacksmiths and chimney sweeps and gas lighters and immigrant meat packers. Coal miners. Will you weep for those poor souls that lost their jobs due to the industrial revolution, electricity, the assembly line? Should we just, go reverse technology for the sake of preserving obsolete labor?

I'm with you on this. I'm just stating my opinion. I agree that people need to adapt, and that we need to develop the skills necessary to succeed in this new economy. The problem is many in the middle class are having a difficult time making the transition.

Blame the schools. Our attitude towards innovation. The fact that many people still pine for the past. Facts are the facts. We need more people working real jobs so in turn they can pay real taxes. We have so many programs that are going to be severely underfunded in the near future. We can't expect a society to just take all the time.

IMO, the deficit is going to increase under Clinton. I don't see how it's going to be any different unless she's willing to make the difficult choices.

 

[Svnla]

I will put this here - http://www.forbes.com/sites/andykoe...nt-issue-americas-national-debt/#740045e44e04

 

[Darwin333]

What is your question? Intragovernmental


It's not 'intERgovernmental debt', it's 'inTRAgovernmental debt'. ie: money the government owes to itself. It is not counted towards US debt and it should not be counted towards US debt because it is simultaneously an asset and a liability so it cancels out. When the government takes in more money for social security than it pays out it is obligated by law to place that money in US treasuries, which accounts for most intragovernmental debt. Debt held by the public is a contract where the US government is obligated to pay X dollars at time Y or else default. Intragovernmental debt has no such requirements (how would you default on a loan to yourself), therefore is not debt that must be repaid in the same fashion. This is mostly an accounting fiction that relates to future expected Social Security outlays. Some people try to claim that this represents debt like debt held by the public, but that's definitely wrong as the government has the ability to change social security benefits to whatever it wants.

Yeah, spellcheck changed it and I didn't notice.

As far as a debt and a liability at the same time, I don't get that. How is borrowing money from yourself, spending it and promising to pay it back an asset? I do understand that the terms of social security can be changed and therefore negate the necessity to pay it back but that is beyond the scope of my question. My bigger question was the difference in debt held by public and the listed deficit which was somewhat answered. It never dawned on me to think about government loans which are in fact an asset so obviously it shouldn't be counted towards the deficit except for any actual defaults. It still seems kind of crazy that we added over double to the public debt than our actual deficit spending.

Question: When those loans get repaid, excluding the interest, does it count as revenue that goes toward the general fund or do the funds have to go to repaying the bonds? I could be very wrong so please correct me if I am, but it seems like it could be a nice accounting trick for future budgets.

-Borrow $100B that does not go against deficit and loan it out.
-Get repaid $100B that you get to spend ($100B less you have to borrow)
-initial debt still stands and is never counted towards any deficit despite the money initially coming from increasing debt to public and eventually being spent on general government funding.

 

[Darwin333]

I will put this here - http://www.forbes.com/sites/andykoe...nt-issue-americas-national-debt/#740045e44e04

One thing I disagree with in that article is that Social Security is a major problem. Social Security is self funding and with a few minor tweaks can continue to be so for the foreseeable future. When talking about entitlement spending Medicare and Medicaid are really the only things that need to be discussed. The rest is insignificant.

 

[fskimospy]

Yeah, spellcheck changed it and I didn't notice.

As far as a debt and a liability at the same time, I don't get that. How is borrowing money from yourself, spending it and promising to pay it back an asset? I do understand that the terms of social security can be changed and therefore negate the necessity to pay it back but that is beyond the scope of my question. My bigger question was the difference in debt held by public and the listed deficit which was somewhat answered. It never dawned on me to think about government loans which are in fact an asset so obviously it shouldn't be counted towards the deficit except for any actual defaults. It still seems kind of crazy that we added over double to the public debt than our actual deficit spending.

Question: When those loans get repaid, excluding the interest, does it count as revenue that goes toward the general fund or do the funds have to go to repaying the bonds? I could be very wrong so please correct me if I am, but it seems like it could be a nice accounting trick for future budgets.

-Borrow $100B that does not go against deficit and loan it out.
-Get repaid $100B that you get to spend ($100B less you have to borrow)
-initial debt still stands and is never counted towards any deficit despite the money initially coming from increasing debt to public and eventually being spent on general government funding.

Here's an article that explains it better than I can I think:

http://www.businessinsider.com/is-money-owed-to-social-security-part-of-the-debt-2010-6

 

[dullard]

As far as a debt and a liability at the same time, I don't get that. How is borrowing money from yourself, spending it and promising to pay it back an asset?

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.

 

[werepossum]

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.

It's invested as far as Social Security is concerned, but as far as the federal government as a whole is concerned that money is spent. It's long gone. The only way to pay back Social Security's "investment" is to take an equivalent amount of new money from taxpayers in future years.

When anyone else does it, this is considered a Ponzi scheme and is prosecutable misconduct. Unfortunately, there aren't many choices for the federal government. If they invest in gold and silver, then the value of gold and silver tends to drop once the program's yearly balance becomes net negative. Same with the stock market. And as we've seen with many government pension plans, they are not necessarily invested wisely.

I really, really wish that Social Security had been set up with individual market index fund retirement accounts combined with long term disability insurance, but it wasn't.

 

[nickqt]

It's invested as far as Social Security is concerned, but as far as the federal government as a whole is concerned that money is spent. It's long gone. The only way to pay back Social Security's "investment" is to take an equivalent amount of new money from taxpayers in future years.

When anyone else does it, this is considered a Ponzi scheme and is prosecutable misconduct. Unfortunately, there aren't many choices for the federal government. If they invest in gold and silver, then the value of gold and silver tends to drop once the program's yearly balance becomes net negative. Same with the stock market. And as we've seen with many government pension plans, they are not necessarily invested wisely.

I really, really wish that Social Security had been set up with individual market index fund retirement accounts combined with long term disability insurance, but it wasn't.

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!