Fact Check: "Federal deficits can lead to increased national debt."
What We Know
A federal deficit occurs when the government's expenditures exceed its revenues within a fiscal year. The U.S. Treasury defines this as a situation where the federal government spends more than it collects in taxes and other revenues, resulting in a budget deficit. For example, in fiscal year 2023, the federal government had outlays totaling $6.13 trillion against revenues of $4.44 trillion, leading to a budget deficit of $1.70 trillion (U.S. Treasury Fiscal Data). To cover this deficit, the government borrows money by issuing Treasury securities, which contributes to the national debt. The national debt is essentially the cumulative total of all past deficits, minus any surpluses (GovFacts).
The relationship between deficits and national debt is straightforward: when the government runs a deficit, it must borrow to finance the gap, which directly increases the national debt. Conversely, if the government runs a surplus, it can reduce the national debt (OpenStax).
Analysis
The claim that federal deficits can lead to increased national debt is supported by multiple credible sources. The U.S. Treasury's Fiscal Data explicitly states that the national debt is the accumulation of borrowing necessary to cover deficits, highlighting the direct link between annual deficits and the overall national debt (U.S. Treasury Fiscal Data). Additionally, the Center on Budget and Policy Priorities explains that annual budget deficits increase the national debt, while surpluses can decrease it (GovFacts).
Moreover, OpenStax provides a clear explanation of how one year's federal budget deficit necessitates the sale of Treasury bonds to cover the difference between spending and revenue, which adds to the national debt (OpenStax). This cyclical relationship is further emphasized by the fact that interest payments on the national debt can create a compounding effect, leading to even higher deficits in subsequent years if not managed properly (GovFacts).
In evaluating the reliability of these sources, the U.S. Treasury is a primary government source, making it highly credible. The Center on Budget and Policy Priorities is a well-respected nonpartisan think tank that specializes in budgetary and economic policy analysis, further supporting the reliability of the information provided.
Conclusion
The claim that federal deficits can lead to increased national debt is True. The evidence clearly illustrates that when the federal government operates at a deficit, it must borrow to finance the shortfall, which directly contributes to the growth of the national debt. This relationship is well-documented and supported by credible sources, establishing a clear understanding of how fiscal policy impacts national financial obligations.
