Economic Policy Specifics

Obama inherited a huge debt of $10 trillion in 2008. Under his watch, it has grown to $16 trillion. Between wails from the Obama campaign about Romney’s tax returns, they also want some policy specifics. Let’s look at the specifics of deficits and the debt.

Since so many people are educated in government schools, a definition of terms is needed so you’ll know the difference between a deficit and the debt. You’ll also be able to tell when you are being lied to where the debt and deficit is concerned.

A ‘deficit’ is the shortfall created when the government spends more in a given year than it collects in taxes and fees. Candidate Obama said that he would cut the deficit in half by the end of his first term.

The debt, or national debt, is the sum of all the deficits.

Bush’s last year produced a deficit of over $500 billion dollars. Bringing the national debt up to $10 trillion.  To keep his promise, Obama’s deficit this year should be about $250 billion. So much for Obama’s “promise” to reduce the deficit by half, by the end of his first term.

Since Obama has been in office, he has had record deficits with each year being over $1 trillion. Between those annual deficits and legislation like Obamacare, the debt has risen from $10 trillion to $16 trillion during his first term.

No surprise that the Obama campaign and their ‘low information’ supporters believe the President when he says he has a plan to solve the nation’s huge debt problem. He doesn’t, and Treasury Secretary Timothy Geithner says so.

In a random act of journalism, AP’s Tom Raum hits the specifics of how both candidates plan to solve the debt crisis.

President Barack Obama has proposed bringing deficits down by slowing spending gradually, to avoid suddenly tipping the economy back into recession.

Translation, they don’t plan on ever spending less than we take in. The ‘slowing spending’ means increasing the debt slower rather than faster. The end result is still increasing the debt. Not reducing it.

Republican candidate Mitt Romney would lower deficits mostly through deep spending cuts, including some of the reductions proposed by his conservative running mate Rep. Paul Ryan of Wisconsin, chairman of the House Budget Committee.

Republican’s plan reduces deficits by (wait for it) reducing spending on a schedule that eventually arrives at a balanced budget. Which is the starting point to actually paying down the national debt.

Today’s quiz: Who has a plan for reducing the deficit and debt? Romney or Obama?