The national debt of the United States is the amount owed by the federal government of the United States, which is the result of years of  deificts and interest accrued. The measure ofhe  the public debt is the value of the Treasury securities that have been issued by the Treasury and other federal government agencies which are outstanding at that point of time.

The Federal Budget consists of 3 main components: Mandatory Outlays, Discretionary Outlays, and Receipts.  Mandatory Outlays are fedederal spending accounts that are spent on existing law, rather than through the budgeting process.  For instance, spending for Social Security is based on eligiblity rules for that program. Mandatory Spending is not partof the annual appropriations process and has peaked to 2/3 of the Federal Budget in 2011, compared with less than 1/3 in 1962.

Discretionary Outlays are the the portion of the Federal Budget that the President requests, and Congress approves/appropriates.  Some Discretionary Accounts include money for: Education, Foreign Aid, Space, Energy, Veterans and Defense.

The revenue that the Federal Government raises is done through Receipts. Receipts include Individal Income Tax, Corporation Income Tax, Payroll Taxes, Unemployment Insurance and more.  The Federal Government has seen decreased revenues in 10 consecutive fiscal years.

The gross amount that Treasury can borrow is limited by the United States debt ceiling.  In recent years, the government has come close to defaulting on its debt by delays in Congress over raising the debt ceiling, during the Debt Ceiling Crises of 2011 and most recently in 2013.  On August 6, 2011, Standard & Poor’s downgraded the U.S.’s AAA credit rating for the first time, slamming the nation’s political process and criticizing lawmakers for failing to cut spending or raise revenue enough to reduce record budget deficits.

DEBT vs. DEFICIT:

It is important to understand the difference between the debt and the annual defiict.  The deficit is the amount by which the govnernments total budget outlays exceed its total receipts for a fiscal year.   Comparatively, the National Debt is the, "amount owed by the federal government of the United States, which is the result of years of deficits and interest accrued.”

Every year in which the government runs a deficit, the money it borrows is added to the federal debt. If the government runs a surplus, it uses the extra money to pay down some of its debt




 

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