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Wednesday, July 29, 2009

Debt vs. Deficit - again

Here is the rundown, one more time. A deficit occurs when, for a given fiscal year, the government's revenues are less than the government's expenditures. A positive deficit indicates that the government must borrow or print the difference; a negative deficit would correspond with a "surplus."

The debt is the accumulated deficits the government has run in the past. Currently the deficit is about $2 trillion and the debt is around $11 trillion.

Why this is so confusing to people I am not sure. I get even more concerned when a reporter at a reputable newspaper sees to get things confused. For instance, consider this paragraph from this Washington Post story:
In his White House press conference last week, Mr. Obama referred to the Bush era at least nine times, three times lamenting that he "inherited" a $1.3 trillion debt that has set back his administration's efforts to fix the economy.
Perhaps President Obama's attempts to "fix" the economy have been hampered by the deficit and the debt inherited by the Bush administration. However, it would be nice if the reporter (or the President) would have referred to the correct measure. Either the debt is hindering Obama's efforts or the deficit, perhaps both are contributing - and that is not necessarily bad.

I hope President Obama knows the difference between the deficit and the debt - I am sure he does but if he misspeaks on the matter it would seem important for the press to ask for clarification. If the press can't keep it straight then perhaps they should hire me to proofread.

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