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| WHY BALANCE THE BUDGET? August 8, 1997 |
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Questions asked
in this forum:What's the difference between the deficit and the national debt? Should domestic spending be considered as "investments?" How does the deficit relate to the $300 million interest payment? Is balancing the budget short-sighted? Will a balanced budget reduce interest rates? Does the budget deal include a plan to reduce the national debt? Viewer comments on a federal balanced budget
NewsHour Backgrounders
July 29, 1997:
A background report and debate on the budget deal struck by Congress and the White House.
June 26, 1997:
The Senate works on finishing touches for the budget reconciliation.
June 10, 1997:
Rep. Bill Archer and Treasury Secretary Robert Rubin discuss the budget negotiations.
May 22, 1997:
The Senate works through numerous amendments on its way to a balanced budget deal.
May 2, 1997:
Congress and the President make a deal to balance the budget by 2002.
February 26, 1997:
The Republican Balanced Budget bill is rejected by the Senate, overturned by one vote.
February 7, 1997:
Office of Management and Budget Director, Franklin Raines, and Sen. Pete Domenici (R-N.M.), debate President Clinton's budget proposal.
January 30, 1997:
The NewsHour historians look at the history of bipartisanship.
Browse the NewsHour's coverage of the Budget
Browse past Shields and Gigot debates.
Outside Links:
The Office of Management and Budget has placed President Clinton's FY 1998 Federal Budget request on the Internet.
Emory Josephs of Tarzana, CA, asks: Dear Mr. Solman:
I always understand economic matters when you explain them. So thanks, first, for the really great opportunity you offer to NewsHour addicts like me who want to understand the economy.
Q: If the debt is $5.4 trillion, then what is the $30 billion deficit? I don't understand the difference between debt and deficit is.
Paul Solman of WGBH-Boston responds:
Dear Mr. Josephs,
At the risk of aggravating your addiction, let me differentiate between the two big Ds: "debt" and "deficit." The Deficit is the ANNUAL shortfall between govt. revenues (what Uncle Sam takes in) and expenses (what he spends). We might run a $50 billion deficit this year, a $40 billion deficit next year, and a $30 billion deficit the year after. In which case, what's The Debt? Well, simply the accumulation of all those yearly deficits. In the case above, it would be $50 billion + $40 billion + $30 billion, or a cumulative total of $120 billion. The national debt number you keep seeing-- $5+ trillion-- is in fact the cumulative total of all past annual deficits up to the present. Every deficit from here on will add to the total. If we run a surplus one year, that will REDUCE the total debt by whatever the surplus amounts to.
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