The U.S. federal budget deficit for the fiscal year 2021 is $966 billion. FY 2021 covers October 1, 2020, through September 30, 2021. The deficit occurs because the U.S. government spending of $4.829 trillion is higher than its revenue of $3.863 trillion.
The deficit is lower than last year. The FY 2020 budget created a $1.083 trillion deficit. Spending at $4.79 trillion was more than the estimated $3.706 trillion in revenue.1
A budget deficit happens when a government spends more than its revenues.
Deficits can be decreased or nullified by raising taxes and curbing government spending.
Deficit differs from debt in that it refers to the yearly fiscal budget. A build-up of annual budget deficits leads to the national debt.
The current U.S. budget deficit is an accumulated result of the War on Terror, unfunded mandatory spending, and tax cuts.
Difference Between the Deficit and Debt
A budget deficit occurs when government spending is greater than the revenue collected. When spending exceeds revenue—or income—it’s called deficit spending. The national debt is the accumulation of each year’s deficit.
When the revenue exceeds the spending, it creates a budget surplus. A surplus will reduce debt.
There is a difference between the deficit and the debt. The U.S. government can use surplus Social Security funds to make the deficit look smaller. As a result, the debt by year will be a little larger than the deficit by year.
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