The difference between the Debt and the Deficit: A Primer

Over the last year or so, there has been a lot of debate in Washington, among the public, and among the media regarding the US debt and the US deficit.  Unfortunately, many members of the public, and sad to say, the media, confuse the debt and the deficit, or have incorrect assumptions about either or both.  Some of my friends have gotten caught up in all the misinformation regarding both, as well.  So, not that this is a national publication or anything of the sort (duh), but here's a primer explaining the difference between the debt and the deficit, and also some recent history of both.

Deficit: This is the negative difference between the total on-budget receipts and on-budget outlays for the US in any given year.  For example, not counting off-budget receipts/outlays, if the US takes in $2.5 trillion in on-budget receipts in 2012 but has $3.5 trillion in on-budget outlays, then the US will have a deficit of $1 trillion for 2012.  Off-budget items include such things as the majority of Social Security and the other entitlements, along with a whole slew of smaller programs.  Most off-budget programs are considered "mandatory" spending, untouchable by the yearly Congressional appropriations process.  In 2010, the US had a total of $2.162 trillion in on-budget receipts and $3.456 trillion in on-budget outlays, and had $631.687 billion in off-budget receipts along with $554.682 in off-budget outlays.  The off-budget items do not affect the yearly deficit or surplus, but affect the yearly total debt figure.

Debt: This is the total amount of money that the US owes to creditors, composed of intragovernmental debt, debt owed to the public, and debt owed to foreign creditors.  Unlike the yearly deficit, this debt accounts for ALL spending/income, both on and off budget.  For example, the published deficit for 2007 was $160.7 billion. However, between January 1, 2007 and January 1, 2008, the US debt increased by $550.9 billion. The difference between the deficit and the debt for 2007 is the result of off budget spending.

Lately, the whole argument over debt/deficit has come up in regards to the past few Presidents' spending legacies.  Due to the rather shady practice of off-budget spending (which began in 1937) the published annual deficits don't mean much more than the electronic "ink" that you're reading right now.  Instead, to look at their legacies, it is much more important to check out the total US debt increase during their terms in office, as that accounts for ALL spending that occured during their administrations.

All debt figures come from the US Debt to the Penny website run by the US Treasury: http://www.savingsbonds.gov/NP/BPDLogin?application=np  Unfortunately, it only tracks back to Clinton, so I can't directly compare Daddy Bush and Reagan with the last three Presidents.  My methodology for determing the amount of debt each President added is to determine what the US debt was during their first day in office, and subtracting that from the US debt during their last day in office.

• Clinton: added $1,539,684,631,121.04 to the US debt from 1/20/93 to 1/19/01
• Compared to the two Presidents after him, a noted "fiscal conservative"
• Dubya: added $4,901,104,747,205.59 to the US debt from 1/20/01 to 1/19/09
• Considered a reckless spender by pretty much everyone, including myself
• Noted for keeping the cost of the wars off budget, which means they were not accounted for in the yearly deficits, but are tallied up in that $4.9 trillion addition to the debt over his eight years
• Obama: added $4,703,901,070,937.52 to the US debt from 1/20/09 to 2/1/12
• Makes Bush Jr look like an avowed fiscal hawk
• Noted for adding the wars to the budget, which helped increase the yearly deficits during his first three years in office

Looking at the total US debt picture under the last three Presidents, each has gotten consecutively worse on the spending front.  Clinton was the closest to a fiscal conservative (helped in a large part by the Republicans, who at the time actually were more or less fiscally conservative), but still increased the US debt by quite a bit during his eight years in office.  The Bush administration spent like a drunken sailor during its eight years, and was justly lambasted for it.  The current administration, however, has spent like a fleet full of drunken sailors, and has nearly added as much debt as the previous administration in less than half of the time.

EDIT: On a side note, to clarify--the US debt accumulated by each President includes ALL spending, so for Bush, it includes the cost of the wars, the Part D benefit, the "cost" of the tax rate decreases, etc.

Any thoughts?