In support of reducing the federal deficit all federally funded departments must reduce their operating expenses by at least 20% by 31 December 2012.
Each year since 1969, Congress has spent more money than its income. The Treasury Department has to borrow money to meet Congress's appropriations.
If you have a deficit every month, you keep borrowing and your debt grows. Soon the interest payment on your loan is bigger than any other item in your budget. Eventually, all you can do is pay the interest payment, and you don't have any money left over for anything else. This situation is known as bankruptcy.