The Role of Government: The National Debt vs. The Deficit

EDUCATOR'S VERSION

This lesson printed from:
http://www.econedlink.org/e184

Posted November 20, 2000

Standard: 20

Grades: 9-12

Author: Marty Yopp

Posted: November 20, 2000

DESCRIPTION

This lesson defines and compares the National Debt with the Federal Budget Deficit. Students will discover the differences between the two and look at current trends. 

KEY CONCEPTS

Budget Deficit, Macroeconomics, National Debt

STUDENTS WILL

  • Define and describe the national debt.
  • Define and describe the federal budget deficit and differentiate that from the national debt.
  • Explain current trends in the debt and deficit.

INTRODUCTION

Debt and Deficit.  The two words are similar and they come up in political debates all the time.  So what exactly are politicians referring to when they talk about the national debt and the budget deficit? 

RESOURCES

federal building


PROCESS

Ask students to read the article on Debts and Deficits and watch the videos, An Animated Film on the Debt & The Deficit and What's Driving up the Federal Debt?  Then ask them to respond to the following questions or statements:

  1. Define the national debt. [The national debt is debt held by the government plus debt held by the public.]
     
  2. What is the federal deficit? [The difference between the flow of government spending and the flow of government revenues.]
     
  3. What is the difference between the national debt and the federal deficit? [The national debt accumulates over time. THe debt is the sums the U.S. government borrowed to cover last year's deficit and all the deficits in years past. The deficit, or surplus, is measured for the fiscal year in which it occurs.]
     
  4. Has the federal budget deficit increased or decreased in the past two years? [Decreased.]
     
  5. Did the United State have a federal deficit or surplus in 2015? How much? [Deficit of $425 billion.]
     
  6. Has the national debt been increasing or decreasing in the past two years? [Increasing.]
     
  7. Why has the national debt been increasing? [Increased spending for large benefit programs such as Social Security and Medicare as the population ages. Also increased spending on defense and interest on the federal debt.] 
     
  8. During what period of time was the debt held by the public (as a share of GDP) the highest? [World War II.]

ASSESSMENT ACTIVITY

Refer to the Federal Budget Infographic , Federal Deficits, 1966 to 2015 and Federal Debt, 1966 to 2015.  

1. Approximately how many years did the U.S. have a surplus?  [6]

2. During which years was the deficit the greatest (as a percentage of GDP?) [2009-2010]

3. Over the last fifty years, what has been the average debt held by the public as a percentage of GDP? [39%]

4. What was the percentage of debt held by the public as a share of GDP at the end of 2015? [74%]

EXTENSION ACTIVITY

Research the statements the 2016 presidental candidates have made regarding the debt and deficit and summarize their positions.