To start lets cover some basics, the national debt refers to the total amount of money that the federal government has borrowed to cover expenses over time. When the government's spending exceeds its revenue in a given fiscal year, a budget deficit occurs. To fund this deficit, the government borrows money by issuing marketable securities, such as Treasury bonds, bills, notes, floating rate notes, and Treasury inflation-protected securities (TIPS). The national debt is the accumulation of this borrowing, along with the interest owed to investors who purchased these securities.