Archive for September, 2014

On the Mysteriously Rising National Debt

Tuesday, September 16th, 2014

I’d like to raise a genuine “finance and economics” question that has been bugging me for a few days:

Why does Debt to the Penny show the national debt has increased by $1,002 billion over the past year, if the federal deficit is supposedly only $520 billion or so?

Calculated Risk sometimes does monthly posts about the Federal Deficit . (I think we’re about due for another one.) The tenor of these is usually “deficits are decreasing, all is well”.

In last month’s post cited above, we were told (by the CBO) that the deficit for 2014 will be 3% or less of GDP, after being just over 4% of GDP in 2013. 2014 GDP is 17,300,000,000,000 $ per year as of Q2. 3% of 2014 GDP is $520,000,000,000, or $520 billion.  4% of 2013 GDP is about $700 billion.

But the national debt for FY2013 and FY2014 has increased at closer to $1 trillion per year, as the chart below shows!

So what gives?

What’s happening with the other $482,000,000,000 in net borrowing this past year? That’s not exactly a small amount of money!

Growth-in-National-Debt-1993-2014

Footnote: We’re very near the end of the fiscal year, so the FY numbers should be comparable to the “past year” numbers. (In 2013 the change in debt from 9/16 to 10/01 (start of the fiscal year) was just $9 billion.)