We've been living on borrowed money, and our government is bankrupt. So bankrupt that it can't hope to even begin paying off the huge five-plus-trillion dollar debt - so it borrows more to cover its payments.
When the Baby Boomers start drawing Social Security, they'll create a fiscal earthquake such as the world has never seen. Where will the billions they demand come from? And even if the government borrows yet more money to pay them, what will happen to the generation after them?
Interest payments on the debt we've already accrued makes up nearly half of what's left. If you don't pay the interest, you default and the world economic system collapses.
http://home.europa.com/~blugene/deficit/debt.html
The government owes roughly forty percent of this money to itself, through the Federal Reserve Bank and other government accounts. The majority of the debt is owed to foreign investors, insurance companies, banks, and other privately held entities. The money is used to operate the federal government, which currently costs around two trillion dollars a year.
The debt is the total amount of money owed by the government, while the deficit is the yearly amount by which the government outspends itself. The debt has grown steadily over the years, but since 1983 it has been on a tear. While our current surpluses are nice, we're still sitting on a big fat IOU that is fast approaching the six trillion dollar mark.
except for a rise at the end of World War II, the Debt remained remarkably constant for nearly forty years when inflationary forces are taken into account. From 1983 on however, the Debt has just been rocketing upwards.
Q: What can we do about the Debt?
A: Write or call your U.S. Senators and your Representative. Tell them your concerns and ask them what they're doing to reduce both the Deficit and the Debt. If you don't like their answers, vote them out of office!
http://www.eff.org/congress/ 
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