Debt vs. Deficit: What's the Difference?

The Deficit Is Annual, the Debt Is Cumulative

The deficit is the difference between what the government spends and what it collects in revenue in a single fiscal year. When spending exceeds revenue, we have a deficit. When revenue exceeds spending, we have a surplus.

The national debt is the total amount the government owes — the accumulation of all past deficits minus all past surpluses.

A Simple Analogy

Think of it like a credit card:

• The **deficit** is how much more you spend than you earn each month
• The **debt** is your total credit card balance

Why It Matters

The U.S. has run a deficit in most years since 1970. Each year's deficit adds to the total debt. The last time the government ran a surplus was in 2001.

Key Numbers (FY2026)

• **Annual deficit**: ~$1.95 trillion
• **Total national debt**: ~$36.2 trillion
• **Debt-to-GDP ratio**: ~123%

The deficit is often discussed in political debates about spending and taxes, while the debt represents the long-term fiscal trajectory of the country.