A sea of red ink is confronting the nation and presidents to come.
The budget deficit — the shortfall created when the government spends more in a given year than it collects in taxes and fees— topped $1 trillion for the fourth straight time in the budget year that just ended Sept. 30. When there's not enough to pay current bills, the government borrows, mostly by selling interest-bearing Treasury bonds, bills and notes to investors and governments worldwide. It now borrows roughly 31 cents for every dollar it spends.
The national debt refers to the total amount the federal government owes; the deficit is just a one-year slice.
The U.S. has been borrowing since the 1700s, when it needed money to finance the American Revolution. The outstanding debt has since risen to a shade over $16 trillion. While there's plenty of finger-pointing by politicians over who's to blame, deficits historically surge during wars and deep recessions, and the U.S. has had both in the past decade.
Where they stand:
President Barack Obama has proposed bringing deficits down by slowing spending gradually, to avoid suddenly tipping the economy back into recession. To help, he would raise taxes on households earning more than $250,000 annually and impose a surcharge of 30 percent on those making more than $1 million.
He acknowledges that his spending on recession-fighting stimulus, tax relief and bailout programs — much of it started under President George W. Bush — has contributed to the deficit. But so have bipartisan agreements to extend Bush-era tax cuts, and paying for the wars in Iraq and Afghanistan.
Also raising deficits: a drop in tax revenues as more people found themselves out of work and personal and corporate incomes that sagged in the deepest downturn since the Great Depression.
Republican candidate Mitt Romney would lower deficits mostly through deep spending cuts, including some of the reductions proposed by his conservative running mate Rep. Paul Ryan of Wisconsin, chairman of the House Budget Committee. But many of the cuts they're pushing would be partially negated by their proposals to lower top tax rates on both corporations and individuals.