What's the difference between the debt and the deficit?

SEE ALL QUESTIONS ABOUT THE NATIONAL DEBT. >> This budget request, developed by the president's Office of Management and Budget (OMB), plays three important roles. First, it tells

Congress what the president recommends for overall federal fiscal policy, as established by three main components: (1) how much money the federal government should spend on public purposes;

(2) how much it should take in as tax revenues; and (3) how much of a deficit (or surplus) the federal government should run, which is simply the difference between (1) and (2). In most

years, federal spending exceeds tax revenues and the resulting deficit is financed through borrowing. Second, the budget request lays out the president's relative priorities for federal

programs — how much he believes should be spent on defense, agriculture, education, health and so on. The president's budget is very specific, and recommends funding levels for

individual federal programs or small groups of programs called "budget accounts." The budget typically sketches out fiscal policy and budget priorities not only for the coming year

but for the next five years or more. It is also accompanied by historical tables that set out past budget figures. The third role that the president's budget plays is to signal to

Congress what spending and tax policy changes the president recommends. The president does not need to propose legislative changes for those parts of the budget that are governed by

permanent law if he feels none are necessary. Nearly all of the federal tax code is set in permanent law, and will not expire. Similarly, more than one-half of federal spending — including

the three largest entitlement programs (Medicare, Medicaid and Social Security) — is also permanently enacted. Interest paid on the national debt is also paid automatically, with no need for

specific legislation. (There is, however, a separate "debt ceiling," which limits how much the Treasury can borrow. The debt ceiling is raised as necessary through separate

legislation.)   Source: Center on Budget and Policy Priorities See also: President's budget SEE ALL TERMS IN THE NATIONAL DEBT GLOSSARY FREQUENTLY ASKED QUESTIONS: NATIONAL DEBT SEE ALL

QUESTIONS ABOUT THE NATIONAL DEBT. >> By law, the Congressional Budget Office is required to produce a cost estimate for every bill reported by a congressional committee. Each cost

estimate of pending legislation assesses (1) the potential impact on spending subject to appropriation (also known as discretionary spending), (2) any impact on mandatory spending (also

known as direct spending), and (3) any impact on federal revenues (incorporating estimates by the Joint Committee on Taxation for legislation that would change the federal tax code). Because

CBO's cost estimates are used to determine whether various budget proposals are consistent with the budget resolution, they've become an integral part of the legislative process.

     SOURCE: Congressional Budget Office See also: Dynamic scoring; Scorekeeping SEE ALL TERMS IN THE NATIONAL DEBT GLOSSARY FREQUENTLY ASKED QUESTIONS: NATIONAL DEBT SEE ALL QUESTIONS ABOUT

THE NATIONAL DEBT. >> The deficit is the difference between what the U.S. Government takes in from taxes and other revenues, called receipts, and the amount of money it spends, called

outlays. The items included in the deficit are considered either on-budget or off-budget. You can think of the total debt as accumulated deficits plus accumulated off-budget surpluses. The

on-budget deficits require the U.S. Treasury to borrow money to raise cash needed to keep the government operating. It borrows the money by selling securities to the public. The Treasury

securities issued to the public and to the Government Trust Funds then become part of the total debt. SOURCE: Treasury Department SEE ALL TERMS IN THE NATIONAL DEBT GLOSSARY FREQUENTLY ASKED

QUESTIONS: NATIONAL DEBT SEE ALL QUESTIONS ABOUT THE NATIONAL DEBT. >>