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Federal Deficit - The amount by which a government's expenditures exceed its tax revenues per year.

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Federal Deficit - The amount by which a government's expenditures exceed its tax revenues per year.

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Federal Debt - The total cumulative amount of annual federal deficits, or the total amount the government has borrowed and not re-payed.

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Federal Debt - The total cumulative amount of annual federal deficits, or the total amount the government has borrowed and not re-payed.

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In order to operate, the United States government must spend money.  But when the government spends more money than it takes in in tax revenue, it must borrow money to pay it's bills.

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In order to operate, the United States government must spend money.  But when the government spends more money than it takes in in tax revenue, it must borrow money to pay it's bills.

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In general, the government always spends more than it takes in each year; it runs a deficit. These deficits accumulate as debt.

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In general, the government always spends more than it takes in each year; it runs a deficit. These deficits accumulate as debt.

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The government borrows money by selling bonds.  These are promissory notes that are given to a creditor in exchange for cash.  They say the government will repay the loan, plus interest, at a later date.

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The government borrows money by selling bonds.  These are promissory notes that are given to a creditor in exchange for cash.  They say the government will repay the loan, plus interest, at a later date.

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Interest on the debt increases - As the debt rises, the interest alone eats up a larger and larger portion of tax revenues.  

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Interest on the debt increases - As the debt rises, the interest alone eats up a larger and larger portion of tax revenues.  

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Taxes have to go up.  As the interest payments rise, taxes must rise in order to keep providing government services.

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Taxes have to go up.  As the interest payments rise, taxes must rise in order to keep providing government services.

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Fewer people are willing to loan the US money.

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Fewer people are willing to loan the US money.

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Talented people notice how large the debt is and give you great School House Rock videos! 

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Talented people notice how large the debt is and give you great School House Rock videos! 

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Schoolhouse Rock: Money - Tyrannosaurus Debt Music Video

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Balanced Budgets - If the government would follow a balanced budget each year, (spend no more than it takes in), the debt could be paid down.

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Balanced Budgets - If the government would follow a balanced budget each year, (spend no more than it takes in), the debt could be paid down.

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Cutting services such as welfare payments, food and medical assistance programs and military spending cuts.  The government would have to shrink it's overall size.

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Cutting services such as welfare payments, food and medical assistance programs and military spending cuts.  The government would have to shrink it's overall size.

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Increase the GDP.  Enact policies that promote economic and business growth. Cut red tape and regulations. Help businesses.

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Increase the GDP.  Enact policies that promote economic and business growth. Cut red tape and regulations. Help businesses.

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Tax laws need to be re-written to make more people or corporations pay more taxes.

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Tax laws need to be re-written to make more people or corporations pay more taxes.