A few posts below, you’ll see that Republican representative Steve Daines of Montana, running for Senate, pledges he’s “fighting for more jobs and less government,” and he touts his bill that says if members of Congress can’t balance the budget, they won’t get paid.
On the trail in the coming year, incumbent Democrats will probably brag, “we’ve cut the deficit in half!” hoping that enough people mix up the terms “deficit” and “debt” in their heads. Deficit measures how much more we spend than we take in each year; debt represents everything the U.S. government owes, and that sum goes up, year in, year out. We had a surplus during the late-1990s dot-com boom, eliminating the deficit, but the debt still increased a bit each year, because the excess funds were “invested in interest-bearing securities backed by the full faith and credit of the United States” as required by law. (More on this here.)
The Congressional Budget Office (CBO) projects the 2014 ”baseline” federal budget deficit will be $514 billion, $166 billion lower than in 2013 ($680 billion). If the 2014 deficit projection is achieved, it would mark the fifth straight year of deficit declines since the deficit reached $1.4 trillion in 2009.
Democrats will hope that reducing the federal government’s annual deficit from the worst-ever to sixth-worst-ever counts as a major achievement in the electorate’s mind.
In fiscal 2013, which ended Sept. 30, net interest payments on the debt totaled $222.75 billion, or 6.23% of all federal outlays. (The government paid out an estimated $420.6 billion in interest, but that included interest credited to Social Security and other government trust funds, as well as a relatively small amount of offsetting investment income.)
That’s $223 billion that could have been spent on anything else the federal government does: schools, fighter jets, veterans’ benefits, border security, Interstate highway repair, medical research. Or it could have been returned to taxpayers! For perspective, $223 billion represented the total sum of all individual contributions to charity in the United States in 2012. You could build 17 new aircraft carriers with that sum. Every penny the U.S. pays in interest on the debt is a penny not spent on actual, tangible stuff that even the lowest of low-information voters appreciates.
The amount the federal government will spend on interest on the debt will look much worse if interest rates go up. Here’s what the CBO projected on that front:
We pay for our borrowing, which is why we have to spend less.