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.
- 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.
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?
The Hutchins Center Explains: Debt and Deficits
: This article explains the differences between the national debt and the federal budget deficit. It also provides historical charts of the debt and deficit.
The Debt to the Penny and Who Holds It
: This link from the U.S. Department of Treasury shows the most current U.S. National Debt.
We the Economy: An Animated Video on the Debt & The Deficit
What's Driving Up the Federal Debt?
video from the former Director of the Congressional Budget Office, Doug Elmendorf
Frequently Asked Questions
about the Public Debt from the U.S. Treasure Department..
- The Federal Budget: This infographic from the Congressional Budget Office shows how Congress is spending your money and trends in the debt and deficit over the last 50 years.
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:
Define the national debt. [The national debt is debt held by the government plus debt held by the public.]
What is the federal deficit? [The difference between the flow of government spending and the flow of government revenues.]
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.]
Has the federal budget deficit increased or decreased in the past two years? [Decreased.]
Did the United State have a federal deficit or surplus in 2015? How much? [Deficit of $425 billion.]
Has the national debt been increasing or decreasing in the past two years? [Increasing.]
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.]
- During what period of time was the debt held by the public (as a share of GDP) the highest? [World War II.]
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? 
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%]
Research the statements the 2016 presidental candidates have made regarding the debt and deficit and summarize their positions.
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