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As we have discussed elsewhere, government debt reduces economic activity by crowding out private capital formation and by requiring future tax increases or spending cuts to accommodate future interest payments.
Whenever a government runs a budget deficit, it adds to its long-term debt. For example, suppose the government of Kashyyyk has a million budget deficit one year, so it borrows money to pay for its budget deficit. The next year the government runs another deficit, this time of million.
A budget deficit occurs when a government spends more in a given year than it collects in revenues, such as taxes. As a simple example, if a government takes in $10 billion in revenue in a particular year, and its expenditures for the same year are $12 billion, it is running a deficit of $2 billion.
To pay for a deficit, the federal government borrows money by selling Treasury bonds , bills , and other securities. The national debt is the accumulation of this borrowing along with associated interest owed to the investors who purchased these securities.
Nearly half of all US foreign-owned debt comes from five countries. Country/territoryUS foreign-owned debt (January 2023)Japan$1,104,400,000,000China$859,400,000,000United Kingdom$668,300,000,000Belgium$331,100,000,0006 more rows

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Rising debt reduces business investment and slows economic growth. It also increases expectations of higher rates of inflation and erosion of confidence in the U.S. dollar. The federal government should not allow budget imbalances to harm the economy and families across the country.
The national deficit refers to what extent the total governmental expenses exceed the total income in a fiscal year. On the other hand, the national debt refers to how much money a country owes to its creditors such as banks and other countries.

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