Definitions of government deficit and debt

Updated at: 10/12/2012 5:35 PM
By The Associated Press

Here’s what’s meant by the deficit and the debt _ and how the government can address them:

_ DEFICIT:

The amount by which spending exceeds revenue during a budget year. When a government spends more than it collects in tax revenue, it runs a deficit for that budget year.

_ DEBT:

A build-up of annual deficits. A government that runs a deficit each budget year must borrow to meet expenses. In doing so, it accumulates a debt. The total U.S. debt tops $16 trillion. The government must pay interest each year on its debt _ payments that contribute to each year’s deficit.

_ THE WAY OUT:

Deficits can be reduced or eliminated when a government cuts spending or raises taxes _ or both _ or when a strengthening economy generates more tax revenue.

(Copyright 2012 by The Associated Press. All Rights Reserved.)