Definition of Budget Deficit
What is a "budget deficit"? What is the definition of a "budget deficit"? What does the term "budget deficit" mean?
On this site, we talk quite a bit about budget deficits and budget surpluses.
Any entity (business, corporation, individual) that sets a budget can run a budget deficit, but for this definition we will be focusing on government budget deficits.
A government (municipal, federal, etc) will set out a yearly budget. A budget will determine the amount of estimated revenues that a government can expect throughout the year, and from this, the government will determine how much money they will be able to spend on expenses.
![Definition of a budget deficit](https://www.davemanuel.com/images/def_budget_deficit.gif)
Many governments (especially when we are talking about federal governments) will run deficits nearly every year.
Deficit spending occurs when a government spends more money than what they take in on an annual basis - or, on other words, expenses > revenues.
So, if the US government spends $4 trillion in a fiscal year but only takes in $3 trillion in revenues, then they will have run a $1 trillion deficit ($4 trillion in expenses - $3 trillion in revenues = $1 trillion in deficit spending).
The United States is expected to run a deficit of about $1.47 trillion this year (2010).
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