No, debt and deficit are not the same thing.

These two concepts are related and easy to confuse. Here is the difference:

There is little time left for Congress to raise the federal debt ceiling and prevent the United States government from defaulting on its financial obligations, an event economists say would be disastrous for the economy.

The approaching deadline has brought to the fore the debate about how to deal with debt and government deficits; it was even the highlight of President Biden’s State of the Union address.

Some VERIFY viewers expressed confusion about the difference between debt and deficit, given that they are similar words about similar concepts.

QUESTION

Are debt and deficit the same thing?

SOURCES

ANSWER

No, debt and deficit are not the same thing.

WHAT WE FOUND

The deficit is a matter of the federal budget, which is approved annually by Congress. If the government spends more than it receives, that difference is the deficit.

According to the US Department of the Treasury, the deficit for the last fiscal year, 2022, amounted to $1.38 trillion. Fiscal year 2023 started in October and so far this year’s deficit is $460 billion.

When the government runs a deficit, it still has to pay its bills. To do this, he borrows money. This creates debt.

Every time the government borrows money, it adds to the debt the US already has, meaning that the debt will continue to grow over time as long as the government continues to run a deficit with each year’s budget.

When the government borrows money, it must repay it with interest. The longer it takes, the larger the interest payments become, further adding to the public debt.

The deficit is calculated over a specific period of time – usually a fiscal year. However, debt is piling up. In other words, if Congress passes a balanced budget, the deficit will be eliminated, but the debt will remain.

According to the US Department of the Treasury, the national debt is currently $31.5 trillion.

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texasstandard.news contributed to this report.

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