#USNationalDebt The federal government borrows money to cover outstanding expenses that accumulate over time. Funds for federal spending are mainly generated by collecting taxes on personal and corporate income, payroll earnings, and borrowing.

The government then spends this money on programs such as Social Security, healthcare, education, infrastructure, and national defense. When the government spends less than the revenue collected through taxes, there is a budget surplus. When government spending exceeds its revenue, the result is a budget deficit.