The US budget deficit, the national debt and the value of money

When someone decides whether to read something or not, including a blog post, they look at the title and determine whether it seems of interest. National income accounting (taxes, spending, the deficit, etc.) is not the most glamorous title in the world BUT maybe the part about money grabbed your attention. Conventional wisdom is that money is the root of all evil, but Mark Twain said it best when he wrote, “Money is not the root of all evil; the LACK OF MONEY is the root of all evil.” And besides, people perk up when the subject turns to money.

Humor aside for a moment, the topic of the deficit and the debt is extremely important. Remember back in 2011 and 2013 when the Congress of the United States seriously threatened to refuse to raise the debt ceiling? Remember the “fiscal cliff” of late 2012? These events caused shock waves to drive through the entire world and almost led to a catastrophe that would have severely damaged the world economy and cost hundreds of millions of people their jobs. And I am not talking about people in the financial sector. I am talking about people in all lines of work – people in communities throughout the United States. You want to talk about community development? Extension does a great job in this effort, but national recessions always rob communities of resources they need in order to thrive, despite the best efforts of elected officials, business people, or outreach educators. That is one of the reasons why I, as a faculty member in Extension Community Development, often teach and write about the national economy and government policies that can damage it or help it.

The difference between the budget deficit and the national debt

Each year the US government collects taxes from the public and spends money on everything from national defense to education. When the government spends more money than it takes in by way of taxes, it runs an annual deficit. If tax revenues exceed spending, we have a budget surplus. Budget deficits are the norm in the USA. Over the past 50 years, we only have had five years of surpluses, one under President Johnson and four from 1998-2001 under President Clinton. As deficits accumulate from one year to the next, the total amount the government owes is called the national debt. The government finances its debt by selling treasury bonds. We hear a lot of hype about who owns these bonds and what happens if they quit buying them. But the truth is that most treasury bonds are held in one form or another by the American public. Pension funds for example, put an enormous amount of the contributions they collect from workers into these bonds because they are such a safe investment. Commercial banks do the same.

Since the US almost always runs an annual deficit, it is obvious that the national debt increases over time. To many people, when they see these numbers, they become alarmed. The national debt first reached $1 trillion about the time Ronald Reagan took office in 1981. President Reagan created all kinds of useless descriptions about the magnitude of this debt – for example stating how high a stack of 1 trillion dollars would be if you piled them all up. This is not a very constructive way to describe any kind of economic phenomenon, but it does often succeed in scaring or angering voters.

The 2011 Debt Ceiling Crisis

As I explained before, the US government acquires a debt by running annual deficits over time. Those deficits are the result of the policies in taxing and spending (called fiscal policies) passed by the Congress and signed by the President. But the Congress also passes laws that limit the amount of national debt the US can acquire. This limit is called the “debt ceiling.” A debt ceiling may seem strange to you, and it really does not make economic sense, but that is what they do. It does not make sense because the debt the US acquires is just a result of the fiscal policy the Congress itself has set. It would be like a family acquiring debt by financing a house, car, etc., based on a household budget it has developed, but then setting some arbitrary debt number that it cannot exceed. Over the years however, raising the ceiling had just been a formality. After all, the Congress had raised the ceiling an average of about 5 times each under President Reagan, Bush 41, Clinton, and Bush 43. But that would all change under President Obama.

In 2010 the Congress set the debt ceiling at about $14.4 trillion. It soon became clear that the US would hit the ceiling by August 2, 2011. Once the ceiling would be reached, the US government would face the likelihood of default on its debt, and would have to take drastic measures, like refusing to pay bond holders, shutting down entire programs, refraining from paying government obligations like money to defense contractors, laying off government workers, etc. More importantly, it would almost certainly cause a US recession and a worldwide economic crisis like we had in 2008.

The Republican leadership of the Congress informed President Obama that they would only raise the debt ceiling under certain circumstances. Many insisted that the President agree to a dollar for dollar cut in government spending (one dollar cut for each dollar increase in the ceiling). Realizing the urgency of the situation, the President agreed to large budget cuts, but only those that would take place in the distant future. As a result, an agreement was reached and the ceiling was raised to $16.4 trillion, which would put off any further crisis until after the 2012 election. Essentially, the parties agreed to “kick the can down the road.”

Junk Economic Science Meets Junk Politics

One question you might be asking is why would the Republican leaders of Congress risk pushing the economy to the brink of a crisis like this? Well that is a great question. Some people really do become alarmed when they see very large numbers, say in the trillions, especially when they are tied to debt. Unfortunately, very few people and as we shall see, including economists, understand the role that national debt plays in an economy of a country that issues its own currency (see my previous blog “Could America Become like Greece?”).

It turns out that a year before the 2011 ceiling crisis, a pair of very well-known economists (Carmen Reinhart and Kenneth Rogoff  – hereafter R&R) published an article in the American Economic Review that purported to show that countries with high debt levels experience low rates of economic growth.

Now, if this notion were true, it would provide quite a bit of rationale for “deficit hawks” and others who wish to maintain a debt ceiling or impose a balanced budget requirement on the US government. But some enterprising and skeptical economists soon got hold of the data that R&R used. Thomas Herndon, Michael Ash and Robert Pollin – (hereafter HAP) showed that R&R had omitted a great deal of the data and had coding errors in other parts. These are egregious mistakes, and when HAP corrected them, they showed that the conclusions R&R had made were completely false. R&R acknowledged some of the mistakes fairly quickly, but they denied others, and have since doubled down on the basic claim that high national debt is associated with low growth, even though scholars like HAP have shown that this is simply not the case. Unfortunately, the erroneous view provided by R&R continues to provide cover for politicians who want to maintain the national debt as an issue over which to fight.

The 2013 Debt Ceiling Crisis

At the end of 2012, just after the re-election of President Obama, the US was about to reach the new debt ceiling of $16.4 trillion it had set in 2011, along with a related threat called the “fiscal cliff.” The Congress and the President agreed on a set of continuing resolutions that kept the government funded until October 1, 2013. On this date, the government began a partial shutdown by laying off slightly more than three quarters of a million workers. The Treasury Department warned that even with the layoffs, the government would default by October 17th. On October 16th, the Congress passed a resolution that suspended the debt ceiling. All federal employees went back to work and received full payment for the time they had been laid off. The crisis was over. Seeing the public opinion numbers, Senator Mitch McConnell (R-Ky) vowed that the Congress would not force a ceiling crisis or a government shutdown again. A dreary and completely unnecessary saga in the history of American political economy had finally ended.

Aftermath and Outlook

And the national debt? Well it has risen from $16.7 trillion in October 2013 to $19.8 trillion in July 2017, and is currently rising at $602 billion per year. So, why don’t we hear much about it anymore? I mean, if the debt was a problem at $14 trillion in 2011, and worth a partial government shutdown at $16 trillion in 2013, surely it is a tremendous threat at nearly $20 trillion now – right? It stands to reason, doesn’t it? No, the truth is, it doesn’t, because the national debt was never a problem to begin with. And the alarmists who said it was, whether they were economists who were incompetent or worse, or whether they were politicians who had an axe to grind with a President they wanted to humiliate, dragged the country through years of uncertainty and alarm over nothing.

So you might be wondering – if the government can just run up debt to pay for what it wants, why have taxes? Just borrow the money, right? The answers to those questions lie in the final part of the title to this blog – the part about the value of money. Taxes are used in part to pay for government expenses – that is true. But taxes are what provide the foundation for the value of money. That’s right, the reason that those paper bills and coins you carry around, or those digits on your computer screen when you check your bank account balance or make an online purchase have value at all is because of taxes, as we will see in detail in my next blog.


Herndon, T., Ash, M., & Pollin, R. (2014). Does high public debt consistently stifle economic growth? A critique of Reinhart and Rogoff. Cambridge Journal of Economics, 38(2), 257-279.

Reinhart, C. & Rogoff, K. 2010. Growth in a time of debt, American Economic Review, 100 (2), 573-578.

Tom Blaine is an Associate Professor, OSU Extension.

What the HACCP?

The title says it all. Most people probably haven’t heard of the HACCP process before, and those that have are likely familiar with it in the food service industry. HACCP stands for Hazard Analysis and Critical Control Points, and it was developed in the 1960’s as a way to prevent astronauts from being exposed to food borne illness. The process was since adopted by the FDA thanks to its effectiveness in preventing the spread of disease via processing and packaging of food.

So why is this Sea Grant fish guy talking about astronaut food?

In a dramatic turn of events, folks from the Great Lakes Sea Grant Network adopted this process years ago and used it to prevent the spread of invasive species and diseases and ensure quality control in the Great Lakes seafood and bait fish industries. Other thoughtful Sea Grant and U.S. Fish & Wildlife Service employees morphed the process even more to address the spread of Aquatic Invasive Species (AIS) in natural resource management activities. (If you’re not familiar with AIS, check out my previous CD blog on Alien Invaders.)

Invasive goldfish in a Lake Erie wetland- How many potential vectors of spreading AIS do you see in this picture?
(Some answers: boat, buckets, waders, net, coat)

As it turns out, this process is pretty successful in preventing the spread of AIS. So much so that there are a number of folks across the country that are certified to train natural resource managers on using the HACCP process in their work. That list includes my colleagues Jenny Roar and Eugene Braig, who along with myself will be hosting an AIS-HACCP workshop at Stone Laboratory August 28-29, 2017.

If your work finds you in the field, then you are a potential vector for spreading AIS, and you should strongly consider taking this workshop. If you know a natural resource professional, please forward along the information so they can help us protect our natural resources from the scourge of invasive species. Even if you’re not a professional in the field but enjoy outdoor recreation, remember to always take steps to prevent the spread of invasive species!

  • Learn to recognize AIS and report new sightings to the Ohio Division of Wildlife.
  • Stop Aquatic Hitchhikers!Clean, Drain, Dry! When using boats or other aquatic recreational equipment, before leaving the water access: inspect and remove foreign material, drain water from all containers (bilge, livewell, etc.), clean with high pressure and/or heated water, and allow to dry for at least five days before transporting between bodies of water. Learn more at
  • Dispose of unwanted bait, worms and fish parts in the trash.
  • HabitatitudeGet Habitattitude! Never dump aquarium pets, plants, other organisms, or water, including bait, from one water body into another. Learn more at

For more information on AIS-HACCP, or AIS in the Great Lakes, contact me at


Title stolen from the creative brain of Sarah Orlando.

Photos and captions from USF&WS AIS HACCP Manual

Tory Gabriel is an Extension Specialist, Program Manager for the Ohio Sea Grant College Program.












non-target species

Technology, Automation, Work & Extension

With rapidly changing advances in technology and automation, the nature of work is rapidly changing too. How will these changes impact jobs and the communities in which we live (and serve)?

As an example, Amazon’s recent move to purchase Whole Foods made headlines not only because the merger will impact how people shop for food, but also how people shop in general. With goals for Amazon-Whole Foodsincreased efficiency, convenience, and personalized experiences, such business models stand to significantly impact traditional workforce and community development models. Given such challenges, how might we go about changing the way we partner with individuals, organizations, businesses and communities to secure and strengthen community vitality?

Or consider this: According to the Bureau of Labor Statistics, 58.7 percent of all wage and salary workers (or 79.9 million workers) age 16 and older in the US were paid at hourly rates. How will this workforce be affected by new automated technologies, especially those paid an hourly minimum wage? How will an increased use of automated technologies drive pursuit of careers in science, technology, engineering, and math (STEM)? According to the Smithsonian Science Education Center, over 40 percent of STEM-related jobs go unfilled due to an unqualified applicant pool in the United States.

Extension professionals work “to create opportunities for people to explore how science-based knowledge can improve social, economic, and environmental conditions.” (OSU Extension, 2017). There is little doubt that the nature of work is changing and what the workforce of tomorrow wants in the way of work is changing too. We are facing some significant challenges… Who is ready to get to work?

Meghan Thoreau is a County Extension Educator (Pickaway County and Heart of Ohio EERA).


Bureau of Labor Statistics. (2017, April 1). BLS Report: characteristics of minimum wage workers, 2016. Retrieved from United States Bureau of Labor Statistics:

OSU Extension. (2017, July 07). Vision, Mission, Values. Retrieved from Ohio State University Extension:

Smithsonian Science Education Center. (2017, July 07). The STEM Imperative. Retrieved from Smithsonian Science Education Center:

Communities that Rock! NACDEP Conference coming to Cleveland!!!

To borrow an old baseball phrase, “you’re on deck” means you are the next person to bat against the pitcher. As yet another reminder of the pace at which time passes, it does not seem all that long ago that Ohio was “on deck” to host the 2018 NACDEP Conference.

Now that the 2017 NACDEP Conference is behind us, it is our turn to bat.

NACDEP 2018 LogoIn June, 2018 (June 10-13 to be exact), Ohio State University Extension will be hosting over 250 practitioners, academics, and Extension professionals in Cleveland, Ohio to engage, learn and share how we make a difference in the communities in which we live and work.

The OSU Extension planning team has been hard at work for the last six months preparing for the conference.

Mobile learning workshops and pre-conference workshops and tours are being planned that include a trip to the Rock and Roll Hall of Fame (the city where rock was born), the Great Lakes Science Center, and a visit to Stone Laboratory (on Gibraltar Island) to name a few.

For our foodies we are also exploring food-related options such as a visit to a vineyard in Cleveland, a tour of the historic West Side Market, and dinner in ‘Little Italy’ where you can dine, recline, and catch up with colleagues.

Like Beer? Like local microbreweries? If so, you will enjoy learning about the Great Lakes Brewing Company and its famous Christmas Ale.

Are you ready to roll?  How about a short drive to visit Cedar Point, the roller coaster capital of the world?

Still not sure if you want to come to Cleveland? Check out this video.

 If you want to learn more about NACDEP 2018 contact: David CivittoloAssociate Professor and Field Specialist, Community Economics ( and NACDEP 2018 Conference Co-Chair.