The Nation Debt

Federal Budget

Money spent by the government every year

Revenue

Money collected by the government, mostly through taxes

Deficit

Money the government spends in a year BEYOND what it gets in revenue that year

National debt

Total amount the government owes

U.S. Treasury Bond

How the government borrows monthly. It sells bonds to people (and foreign governments) and then pays them back after a certain number of years, WITH INTREST

Bonds

Bonds are an investment product where you agree to lend your money to a government or company at an agreed interest rate for a certain amount of time. In return, the government or company agrees to pay you interest for a certain amount of time in addition to the original face value of the bond.

When the federal government spends more than it receives in tax revenues, how does it pay for the difference?

By selling U.S. treasury bonds

Why is growing national debt a problem?

• The more the debt is owned by a foriegn powers, the more vulnerable the U.S. is to outside influence

• Debt interest payments are growing as percentage of federal spending, which could crowd out other spending

• The larger the debt, the more the chances that interest rates will go up and borrowing will become more expensive for government