Crash Course on the National Debt

Abstract

Just like a household, the U.S. federal government operates on an annual budget. While households spend money on food, clothing, and shelter, the U.S. government spends money on big items such as roads, defense, and education. If a household spends more than it earns each year, it must borrow money or dip into savings, if available. So too for the government. When it spends more than it takes in through taxes and other revenues, a deficit occurs and it must borrow money. This chapter explores budgeting, deficits, surpluses, and debt—government style.