So what is the deficit anyway?
Each year, Congress and the President approve a budget outlining projected tax revenues for the year and projected expenditures for the year. The Budget of the United States Federal Government is a massive document detailing taxation and spending in the trillions of dollars.
If budgeted tax revenues exceed budgeted expenditures for a given year, then the federal government is said to have a budget surplus for that year (this is rare). If budgeted expenditures exceed budgeted tax revenues, then the federal government is said to have a budget deficit for that year (this is normally the case).
When there is a budget deficit, the federal government has to borrow the money to make up the shortfall between revenues and expenditures. This is where our national debt comes from. The national debt is the cumulative total of the money the federal government has borrowed to pay for its budget deficits.
For the 2010 budget year, the federal government has budgeted tax receipts of approximately $2.4 trillion and budgeted expenditures of approximately $3.6 trillion, leaving a budget deficit of roughly $1.2 trillion. That means the federal government expects to add about $1.2 trillion to the national debt in 2010.
Stated another way, the federal government plans on spending 50% more than it collects in taxes in 2010. If American families ran their household budgets this way, they would go bankrupt. But our Washington politicians seem to think they can keep spending as much as they want to, regardless of how much money our government actually has.
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