The federal government gives billions of dollars in grants to state and local governments who then spend it themselves. When combining government expenditures, we count these grants as money spent by states to avoid counting them multiple times.
Deficit vs. Debt
The annual deficit (or surplus) is the difference between government revenue and spending in each year. Government debt represents the sum of accumulated deficits. This is the money that governments owe their creditors.
Over time, the amount of goods or services you can buy with a dollar diminishes because of inflation, or a general increase in consumer prices. That means a dollar in 2015 bought less than a dollar in 1980. We express values two ways: in “nominal” and inflation-adjusted terms (2015 dollars).
As the population increases, the number of taxpayers and the number of people who government serves also increase.