Deficit and Debt: Are we Winning?

Today’s local paper reports that for the first time in 45 years of girls’ softball, our high school team is on its way to the state tournament! The whole town is celebrating.

The softball program has had many disappointments in those 45 years. However, the current coach has taken his team from a 4/26 win/loss record his first year of coaching to, this year, the state tournament. A celebration is warranted.

The paper’s financial column suggests another celebration, for the fact that our Congress has reigned in spending. As a percent of GDP (the country’s Gross Domestic Product), the federal deficit dropped to 20.4% in the fiscal year just completed from 24.4% five years ago. The year’s federal deficit (expenditures exceeding tax and fee income) was about $800 billion less than four years earlier.

Does the latter warrant a celebration? Are the two stories comparable? Let us compare the consequences of each.

Our softball team may bring home a state trophy. Even if it should lose the first game, there will be life-time memories for every team member. As to next year, the team will start at 0:0, no losses to overcome.

As to the year’s federal budget, however, there remained a sizeable deficit, nearly $500 billion. There is $500 billion more debt to overcome!

The decrease in our federal deficit is comparable to our softball team losing to its major competition by ten points five years ago and only by six points this year. It was still a loss. Should that bring a celebration?

Our budget deficit and cumulative debt can also be compared to those of my former neighbor. He confided a year ago that he had piled up a $4,000 credit card balance by taking his family to Europe in August and to Disney World for Christmas. This year, the family tightened up; they skipped a foreign trip but could not forego Disney World and its cost. His credit card balance grew to six thousand dollars. His deficit for the year was less, but his debt grew.

I suggest that we be sure our local financial writers, as well as our friends and neighbors, understand the difference between an annual budget deficit and the federal debt.

At $19 trillion, our country’s debt is more than 100% of our country’s GDP! Only when the federal debt remains level, with no annual deficits, or is reduced, should we celebrate.

Duane Acker

419 words.