Budget Deficit and National Debt A budget deficit exists when the federal government spends more than they are receiving in revenues within the year. When the federal government experiences budget deficits, the federal government has to borrow money to meet obligations outlined in the budget. This borrowing adds to the National Debt, which is carried over year after year until paid.

Entitlement Programs An entitlement program provides benefits to any citizen who is eligible for support regardless of need. Some entitlement programs are “means tested” Means Tested Entitlements are programs that require individual citizens to prove they do not exceed certain income and asset levels before they can receive benefits. Entitlement programs are considered an uncontrollable part of the federal budget.

Examples of Entitlement Programs – Medicare – Medicaid – Social Security – Unemployment – Veterans Benefits – Food Stamps – Federal employee and military retirement plans.

Entitlements Congress has no discretion on how much money to appropriate for entitlement programs. Since Congress must spend money on entitlement programs, it has insufficient discretion to bring about a balanced budget. Since entitlements account for more than two thirds of the federal budget, Congress is not left with much to cut in order to bring about a balanced budget.

Consequences of Large Budget Deficits. There is a large amount of interest paid on the debt. Deferring payment puts a burden on future generations.