Budget Deficits and the National Debt

Budget Deficits and the National Debt

• A budget deficit is the amount by which the federal government's outlays exceed its revenue in a given year.
• The National Debt is the federal government's total indebtedness at a moment in time. It is the accumulation of previous deficits plus outstanding interest.
• The difference is the difference between flows and stocks. An analogy is to think of water filling into a pool.

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