We now turn our attention to how government spending is
financed, and the economic consequences of these financing
decisions. First lets start with some definitions: I. Deficits,
Surpluses and Debt: Definitions and A Brief History A budget
deficit occurs when the government spending exceeds government
revenue in a given time period, usually one year: deficit =
government spending - revenue, where spending > revenue. A
budget surplus occurs when government spending is less than
government revenue in a given time period: surplus = revenue -
spending, where revenue > spending. In measuring deficits and
surpluses, the government uses its fiscal year (October 1 -
September 30), not its calendar year. The national debt is a
running total of all deficits minus all surpluses, since George
Washington. The United States has borrowed more that is has
saved during its 224 years, so the United States owes its
citizens and foreign governments about $5.6 trillion as of 1999.
The United States borrows money by having the Dep