McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved.
Chapter 10
Federal Deficits, Surpluses, and
the National Debt
McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved.
Chapter Outline
•Surpluses, Deficits, and the Debt:
Definition and History
•How Economists See the Debt
•Who Owns the Debt
•A Balanced Budget Amendment
•Projections of the Future
McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved.
Surpluses, Deficits, and the
Debt: Definitions
•Budget Deficit: the amount by which
expenditures exceed revenues
•Budget Surplus: the amount by which
revenues exceed expenditures
•National Debt: the total amount owed
by the federal government
McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved.
Off vs. On Budget
•Off-budget: parts of the budget designated
by Congress as separate from the normal
budget. Programs that operate with their own
revenue sources and have trust funds; Social
Security, Medicare, and the Post Office are
examples.
•On-budget: parts of the budget that rely
entirely or mostly on general revenue.
McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved.
History of Deficits, Surpluses,
and the National Debt
•Revolutionary War debt $75 million
•Closest budget to balance (no deficit or surplus) was
$3800 in 1835
•There were more years of surplus than deficit
between 1791 and 1836 resulting in a national debt of
only $37,000
•Civil War debt reached $2 billion
•From 1865 to 1930 the debt reached $50 billion
•By 1946 (the end of WWII) the debt was $250 billion
•By 2000 the debt was $5.6 trillion