A deficit occurs when the government spends more than it receives in revenue. When governments run budget deficits, the money to cover those shortfalls has to come from somewhere. The national debt is the accumulated sum of fiscal budget deficits, reduced by the amount of any surpluses.
When there’s a deficit, the federal government will borrow the requisite amount of funds by issuing new bonds. This enables them to cover the gap between revenues and expenses; however, it comes at a cost because interest must be paid to bondholders, which adds to the national debt.
The national debt is the amount of money the federal government has borrowed to cover the outstanding balance of expenses (or deficits) incurred over time.
It’s actually quite common for federal governments to have recurring deficits, which is how national debt builds. In fact, the U.S. has carried debt since its inception. Debts from the American Revolutionary War amounted to $75 million, primarily borrowed from domestic investors and the French Government for war materials. The debt grew steadily during the 20th century to approximately $22 billion after World War I and has continued to grow to its 2024 level of more than $34 trillion.