♪ ♪ [ragtime music ♪] [narrator]
We interrupt this adorable

cat videofor an amazing
animated film
on the debt and the deficit!I know what you’re thinking: Boring! But everything is fun
when it’s a cartoon! Whoa! See what I mean? Uh-oh!
[smash] Don’t worry, I’m fine, so don’t click back
to that cat video! Don’t do it! Come on, let’s go.1789, the Federal Government
was formed!
[cheers, whistles]That was also the first yearthat the Federal Government
ran a deficit,
that is, it spent more money
than it took in in taxes…
[gasps, groans]…and borrowed
to cover the hole.
And for the next
220-something years
the Federal Government
carried a debt.
Except for 1835 and ’36,
baby! Best president ever! [narrator]
A lot of people

use the termfederal deficit
and federal debt
as if they meant
the same thing,
but they don’t!The deficit is
the amount of money
the government needs
to borrow in one year.
The debt is the total
amount of money
that the government owesall of the years
of borrowing combined.
Most of this money is
borrowed from investors
who the government promises
to pay back with interest.
Some people think
debt is scary,
sinister, even immoral!But people take out loansto do all kinds
of important things,
like go to college,which can be
a great investment.
[laughs, cheers]Assuming you actually study.Over the past few years, America has been climbing
out of a recession. And there’s a debate
among smart people about whether deficit spending is the best plan for helping
the economy recover.One side says:
Government spending can jumpstart the economy
like how spending during World War II helped
end the Great Depression.But the other side disagrees.Sure, it’s fun
to spend a lot today, but we’ll pay for it
in the long run! [narrator]
But whoever is right
about short-term
deficit spending,
pretty much
all economists
agree that
in the long-term
if nothing changes,the growing debt
will become a problem.
It’s true! But only in the long-term! [narrator]
The deficit in 2014
is around $500 billion,and the total debt
to the public
is around $12.6 trillion.This number
does not include money
the Federal Government
has borrowed from itself,
which would bring the total
to 17 trillion.
Some restrictions may apply.Now that’s a lot of money.Just one trillion dollars
would cover a football field
with $100 bills
10 feet deep.
This is our house. [narrator]
And $12.6 trillion
would look like this.But economists agree
the real question
isn’t so much how big
the debt is in dollars,
but rather,
how big it is
compared with
the total economy,
or GDP.♪ Which is $17 trillion
a year ♪ [narrator]
The reason for that

is pretty simple.To a person earning
minimum wage,
having a $100 thousand debt,say, a home mortgage,would be really scary.[crying]But to someone making
a million dollars a year,
a $100 thousand debt
isn’t so bad.
Eh.Same goes for countries.[grunting]A large economy
can support more debt
than a small one.So, when people who know
what they’re talking about
assess the debt and deficit,they talk about it as:A percent of GDP. The deficit and debt have never
been so high in dollars, but as a percent of GDP
it’s been worse. At the end of World War II the annual debt was
significantly higher
than today……and in the past five yearsthe annual deficit
has decreased each year.
So that means, there’s nothing
to worry about! Woohoo! [narrator]
But that doesn’t mean
there’s nothing
to worry about.
Aw, man! The non-partisan
Congressional Budget Office projects that if
our policies stay the same the debt will increase
in the decades ahead to unsustainable levels. [slide whistle]While there are a lot
of expensive items
in the budget,
the CBO says
there are three areas
set to grow
most dramatically.
The number of older
Americans is increasing,
which will put a strain
on Social Security
in the future.Healthcare has gotten
more expensive
throughout the country,increasing the cost
of programs like Medicare
and Medicaid.And interest payments
on the debt
are likely to increaseas the size
of the debt grows.
And if interest rates,which are extremely low
right now, go up,
it would get even worse.[chomping]Whether you’re conservative
or liberal,
whatever you want
the government to do,
fund schools or military,or deal with
an unexpected crisis…
[chomping, burps]…all of it would become
more difficult.
So, what do we do?Don’t look at met check, sonny. Or my healthcare. Don’t even think about it. You see the problem. Americans want their services and they also want low taxes, but it’s simple math. Managing the debt
in the long-term is eventually going to require some combination
of raising revenues, cutting spending, and growing the economy
as a whole. Ha, makes sense to me! Okay, you can go back
to the cat video now. [cheering] [ragtime music ♪] ♪ ♪