A Citizen's Guide to the Federal Budget Budget of the United States Government Fiscal Year 1999 1. If spending is greater than revenues, the Government runs a deficit. To finance deficits, the Government has to borrow money.
Government borrowing adds to the national debt.
Some types of spending such as improvements in education and support for science and technology increase productivity and raise incomes in the future. Taxes, on the other hand, reduce incomes, leaving people with less money to spend. When the economy is doing well, people are earning more and unemployment is low. In this atmosphere, revenues increase and the deficit shrinks. The budget reports on how the Government has spent money in the past, and how that spending was financed.