President Obama said today that he is going to cut the federal deficit in half by 2013. The MSM is touting this as a huge deal and continues to paint the portrait of Obama the Messiah.

Obama stated:

I refuse to leave our children with a debt they cannot repay,” he said in remarks opening the one-day summit at the White House. “We cannot and will not sustain deficits like these without end. ... We cannot simply spend as we please.  (source: CNN)

If only he would back up his words with a real plan and follow through…

What most people don’t understand is the difference between DEFICIT and DEBT.

From our very own Treasury:

The deficit is the fiscal year difference between what the United States Government (Government) takes in from taxes and other revenues, called receipts, and the amount of money the Government 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. We borrow the money by selling securities like Treasury bills, notes, bonds and savings bonds to the public. (source: TreasuryDirect.gov)

Let’s use a hypothetical situation to paint the real picture:

• In 2008, your discretionary income was $10,000 (the state and federal governments plundered a nice chunk from you, and your living expenses shot up dramatically)
• You spent $20,000 on a car, plasma television, a new computer, and other crap
• Your deficit for the year was $10,000
• You also have debt from student loans and past medical expenses amounting to $25,000
• In order to make yourself feel good about yourself, you plan to cut your deficit in half.

So next year you still have $10,000 in discretionary income (you cannot easily raise your income like the government can), and since you are so “forward-thinking” to cut your deficit in half, you only spend $15,000. At the end of next year, you look at the numbers and…

• Your deficit was indeed cut in half. Last year it was $10,000. Now it is $5,000. You celebrate this with a night on the town.
• You’ve still ADDED to your total debt. You spent more than you had AND you had (and will continue) to pay interest on both the new debt and the old debt.
• Your overall position isn’t much better. But you can call your parents back home and spin the numbers in your favor as you ask them for more money.

This is basically what the government does. They say they will cut the deficit to get elected. They quote numbers that make them seem good to the average citizen. Then when the national debt continues to inflate out of control and further screws our posterity, they say they have no choice but to RAISE TAXES!

Spend and tax. Tax and spend. At least the government is rather consistent.

So Obama saying he is going to cut the DEFICIT doesn’t really mean a whole lot, especially when he quotes $1.3 trillion in deficit (which is pre-“stimulus”).

Our current national debt is $10.8 trillion dollars.

Do something meaningful Obama. Your porkulus plan and tax the so-called rich strategy will not work. If you really cared about our children’s future, you would address the national debt.