Final answer:
The policy the federal government began that involves going into debt for government costs is called deficit spending. This occurs when spending exceeds revenue, requiring borrowing. Interest on the national debt automatically increases as the debt grows.
Step-by-step explanation:
The federal government also began a policy of deficit spending, or going into debt to pay for the costs of the government. Deficit spending occurs when the government spends more money than it has collected in revenues, such as taxes. This approach has characterized the federal budget since World War II. When the government runs a deficit, it borrows money, often through the issuance of Treasury bonds, to finance its spending. This borrowing can come from both citizens and foreign countries.
National debt is the accumulation of all the government's past deficits, where each year's deficit spending contributes to the larger total debt. An important aspect of deficit spending is the concept of fiscal policy, which comprises the federal government's policies on spending, taxation, and borrowing.
One category of government spending that automatically increases with the federal debt is interest payments. As debt grows, so too does the amount of money required to service that debt—i.e., to pay interest to the holders of the debt instruments.