National Debt – How To Understand It

national debt

National Debt can be a pretty confusing topic to the average American.  We hear news reports about the National Debt and the Budget Deficit, but most people aren’t totally clear about what those terms mean.  Most people know that we have a big national debt, and they assume that’s not a good thing, but that may be just about all they understand about the topic.  If you find yourself getting confused about the National Debt, this post is intended to help you understand it in very simple terms. 

Before we get into an explanation of the National Debt, let’s talk about the Budget Deficit.  Although those two terms are related, they are NOT the same thing at all (even though the terms sometimes get used interchangeably).

The Federal Budget Deficit is the amount by which federal spending exceeds federal tax collections in a SINGLE year.  For example, for the year 2010, the federal government budgeted tax receipts of approximately $2.4 trillion and expenditures of approximately $3.6 trillion, leaving a budget deficit of approximately $1.2 trillion.  That means the federal government needs to borrow $1.2 trillion in order to meet all of its projected obligations in 2010.

The National Debt is the cumulative running total of the federal government’s outstanding debt since our inception as a nation.  It includes all the money our federal government has ever borrowed, less the amount it has paid back.  So using the 2010 numbers, the National Debt would be expected to increase by approximately $1.2 trillion in 2010.  The National Debt Calculator below shows an approximation of our total national debt as of today. (By the way, if you’re not used to numbers that big, it’s trillions of dollars.)

The National Debt Clock

Our National Debt has been growing at an uncontrollable pace in recent years, and we need to insist that our Washington politicians stop borrowing and spending this way. 

Thank you for visiting this site and reading this article on the national debt.   Your interest in the national debt and related topics is very much appreciated, and you are invited to read additional articles on this site.