Over the years I have found that many folks don’t understand the difference between deficits and the debt, and friends have encouraged me to write about it. I hope you will not stop reading at this point because you think this is going to be way too complicated or boring. The truth is this is not hard to understand and I’m fairly confident you’ll be glad you stuck with it and read the whole article.

For our purposes let’s talk about our national debt and deficits since that’s what most of us are concerned about and what newscasters and columnists write about. Simply put, the national debt is the amount of money that is owed by the government to whomever for products and services the government purchased but has not yet paid for. The government can and does owe money to contractors like painters and builders. It buys from manufacturers of hammers, desks and paper, etc., etc. etc. and some of what it spends is on credit. The amount they put on credit in any given year is called the deficit. That is deficit spending not unlike us taking out a loan for a car or a house. That is also deficit spending. The amount that we owe in total from all the years of deficit spending is called the debt.

I know this sounds pretty scary but it is the way our government has always worked. Often times we engage in deficit spending to drive our economy forward. In the 1980s, President Ronald Reagan ran the largest deficits and created the largest debt that our country had ever known up to that point. As a result our economy grew rapidly and many of us only remember the positives of that time.

Remember it is the spending of money that moves an economy forward. When the citizens are spending less, then the government must spend more or the economy recedes or shrinks. That’s called a recession. And if the recession gets bad enough, it is called a depression, like we had in the 1930s. The reason we had the Great Depression was that President Herbert Hoover refused to increase government spending when the people had pulled way back as a result of the stock market crash in 1929. The economy was so bad back then that average people were doing very desperate things. For example, my grandfather was selling apples on the street for a few pennies just to try to feed his family. There were no food stamps, no government programs to keep folks from starving or becoming homeless.

Now, I don’t want to sound as if I am a proponent of perpetual deficit spending. I am not. In fact I believe that in good economic times, not only should we not deficit spend, I’m a strong advocate for paying down the debt during those times. That is exactly what we did, or at least began to do at the end of the 1990s when Bill Clinton was president. If President Bush and Congress had continued paying down the debt it might not be so high now.

One point that I am making is that we do have a choice. If we choose not to deficit spend during tough economic times like these, then we are likely to make the times far tougher. One of the reasons that the United States has fared better than most other industrialized nations during the great recession was our approach of significant deficit spending. The challenge is to make sure our leaders pay down the debt when times are good and that is up to us. We need to keep watch on our governmental officials even in good times. Nuff said.

Thanks for reading, for staying informed and engaged in our community by reading every day. Please drive safe, be kind, hug your children, shop local and have a wicked, cool, outstanding, magnificent spring week!

— Bruce M. Hardina is the Publisher of the Journal Tribune, a singer song-writer, a philosopher, a student of life and the human experience, a columnist, a loving neighbor, friend, father, son and brother. Please feel free to comment on his musings with a Letter to the Editor by emailing jtcommunity@journaltribune.com or mail a note to Journal Tribune, Attn: Editor, 457 Alfred Street Biddeford. ME 04005.

Copy the Story Link

Comments are not available on this story.