Q:

Why does the United States have debt?

A:

Quick Answer

The United States has debt because it has to borrow money in order to pay for services, such as education and military programs. The amount that is collected through taxes is not enough to cover the different services the government is responsible for providing.

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Full Answer

The United States functions in a similar fashion to a business. The country not only has to provide certain programs to its citizens, such as health programs, but it also needs equipment and supplies to operate. The government takes taxes from private citizens and corporations through a number of efforts. For instance, income tax is paid by individuals for income they have earned over a year's time. Corporate tax is charged to companies based on what they earned during a year.

The amount that is collected in taxes is not enough to pay for everything the United States needs to function. As a result, the country has to take out loans from various sources, including foreign investors and banks from other countries. The United States has borrowed from China, Belgium and different Caribbean countries. The country also borrows from domestic banks and other financial institutions. The U.S. Treasury has a limit on how much it can borrow.

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