A budget deficit occurs when a government's expenditures exceed its revenues over a specific period, typically a fiscal year. This means that the government is spending more money than it is bringing in through taxes and other income sources. To cover this shortfall, the government may borrow money or use reserves. Budget deficits can lead to increased national debt, as the government accumulates obligations to repay borrowed funds. While some argue that deficits can stimulate economic growth during downturns, persistent deficits may raise concerns about long-term financial stability and the ability to fund essential services like education and healthcare.