Federal Deficit

The federal deficit is the amount by which the U.S. government's annual spending exceeds its revenue from taxes and other sources. When the government spends more than it earns in a year, it needs to borrow money to cover the gap, increasing the national debt. A deficit can result from increased spending on programs, defense, or economic stimulus, or from decreased revenue due to lower tax income. Managing the deficit is important for economic stability, as persistent high deficits can lead to higher interest costs and affect the government's ability to fund priorities effectively.