CRS Report on Deficits, Debt, and the Economy, An Introduction

A Congressional Research Service report introduced concepts regarding federal budget deficits and debt. Deficits occur when government spending exceeds revenue over a fiscal year. Federal debt accumulates from borrowing activity and net budget deficits.

Understanding Government Budget and Debt

A budget deficit occurs when federal spending exceeds federal revenue over a fiscal year. A surplus happens when revenues are greater than outlays. Federal debt measures the total borrowing activity from various sources. Federal debt increases when there are net budget deficits and outflows for federal credit programs. Federal debt also rises from intragovernmental debt created by trust fund surpluses used for other government activities. Budget deficits increase federal debt levels, which causes future net deficits to increase. Interest payments on publicly held debt instruments contribute directly to federal deficits.

Budget Deficits and Federal Debt

Persistent budget deficits and growing federal debt raised questions about budget projections. The Great Recession and COVID-19 pandemic responses created the five largest real federal deficits since World War II. Publicly held debt was projected to be 101% of GDP by the end of FY2026. This amount was more than triple the value recorded at the end of FY2001, which was 32% of GDP. Budget forecasts showed rising deficits and faster increases in publicly held debt in future decades.

The report, Deficits, Debt, and the Economy: An Introduction (R44383), by Grant A. Driessen, Grant A. Driessen, is dated November 5, 2026. Read it on Congress.gov.