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What is the Deficit? The federal government deficit is the current gap between the money brought in as revenue and the money going out as spending. The federal government debt is the cumulative amount of money borrowed. You probably have to incur debt to cover a deficit, but a deficit can be temporary while a debt may stick around for a while.
If government spending is $100 billion while government revenue is $120 billion, the government is said to have a: $20 billion budget surplus. If government spending is $500 billion while government revenue is $475 billion, the government is said to have a: $25 billion budget deficit. Suppose the government's initial debt is $70 billion. If for the next three years the government runs deficits of $10, $25, and $40 billion, the government's total debt at the end of the three years will be: $145 billion. Suppose the government's initial debt is $150 billion and that during the next two years the government runs deficits of $30 and $10 billion. If during the third year the government has a $15 billion surplus, the government's additional debt at the end of the three years will be: $25 billion. If there was a federal budget surplus it would make it possible to: