Plain meaning
The amount by which federal government expenses exceed revenues over a fiscal period.
Also called
budget deficit
deficit
Key points
- A deficit occurs when spending and other expenses exceed revenues for the fiscal year.
- A surplus occurs when revenues exceed expenses.
- Deficits add to federal borrowing needs and can increase public debt over time.
- Debt-service costs can affect the fiscal room available for tax cuts, credits, benefits, or program spending.
- Budget projections are forecasts and can change with economic growth, interest rates, policy decisions, and unexpected events.
Why it comes up
Deficits affect borrowing, debt-service costs, fiscal room, tax-policy choices, and public-finance debates.