Quite simply, in accounting terms, the government (fiscal) deficit is the difference between what the government spends and what it collects in taxes.
The National Debt is the accumulation of that spending year on year. It represents the total amount of payments that the government has made into the economy and forms what is known as the base money supply.
From the government’s accounting perspective this is a deficit. But when the government has a deficit, someone else has a surplus. Who has the surplus? It is the rest of the economy – households and businesses. As everyone knows balance sheets must balance. The government deficit, in fact, represents our savings.