This student booklet with accompanying teacher's guide examines the issues and controversies surrounding the nation's debt and deficits. The first section defines key terms relating to the issues and traces how the United States got on the road to fiscal disorder. The second section examines what specific federal spending programs have triggered the accumulation of large annual deficits. Section 3 compares the recently proposed deficit reduction plans made by President Clinton, Ross Perot, and the Concord Coalition. The last section addresses the issue of whether people are prepared to sacrifice to bring down the debt and, if they are not, what the consequences might be for the nation. Chapter titles include: (1) "Deficits As Far As The Eye Can See"; (2) "Budget Deficits and the National Debt"; (3) "Federal Spending: Where Does the Money Go?"; (4) "The Pain and Gain of Deficit Reduction"; and (5) "Is America Ready for 'Fair, Shared Sacrifice'?" Nine bibliographic references for further reading conclude the text. The teacher's guide offers classroom activities, handouts, and test materials around which to create a comprehensive lesson plan. Used in conjunction with the student booklet, this teacher's resource will help students gain an understanding of why the United States has such huge budget deficits and how they may be reduced in the future. (EH/AA)