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Why does the U.S. Government have debt?

The U.S. Government is just like a business. The Government has to provide services for the people of the United States such as military protection, education and health programs, the space program, and social services programs. It also needs money to buy supplies and equipment.

The Government's main source of money is the taxes it collects from individuals and businesses. There are different kinds of taxes. Here are some examples:

  • Income tax (money people pay to the Government based on how much they earn from their jobs)
  • Sales and excise tax (money people pay to the Government when they buy things)
  • Corporate tax (money businesses pay to the Government based on their earnings)

However, the amount of money the Government spends to pay for the services it provides is often more than the taxes it collects. To make up the difference, the Government borrows money – in other words, it goes into "debt."

Treasury Notes:  With T-Notes you receive interest from the Government every six months.  When you reach the end of the note's term, the Government pays you the full total value or Face Value of the note.