U.S. Budget Deficit by Year Compared to GDP, Debt Increase, and Events

Is the U.S. Deficit Really That Bad?

Image shows four multi-cultural people in business garb climbing a graph indicating that the deficit has been increasing. Bottom of the graph shows years 2006-2019
••• Image by Daniel Fishel © Jacara 2019

The U.S. budget deficit by year is how much more the federal government spends than it receives in revenue annually. The Fiscal Year 2020 U.S. budget deficit is expected to be $1.1 trillion. That's the largest deficit since 2012.

Spending was high in 2012 to combat the 2008 financial crisis. Tax receipts dropped due to the recession at the same time. Revenues are expected to be the highest in U.S. history in FY 2020, but President Donald Trump and Congress have ramped up deficit spending as well to pay for record-high levels of military spending.

Social Security and Medicare are mandatory programs that are also expensive, but payroll tax revenues cover most of their expenses.

Deficit Trends

The deficit should be compared to the country's ability to pay it back, and that ability is measured by gross domestic product

Each year's deficit adds to the national debt. The comparison is referred to as the debt-to-GDP ratio. The country reaches a tipping point if the ratio is more than 77%. That's when lenders begin to worry about whether it's safe to buy the country's bonds. High deficits push the country toward that tipping point.

The deficit has been considerably less than the increase in the debt since 1987. Then Congress began borrowing from a surplus in the Social Security Trust Fund. The  by the baby boomer generation. There were more working people than retirees when baby boomers were in their 20s and 30s. Their payroll tax contributions were greater than Social Security spending.

The Fund invested the extra revenue in bonds. Congress spent that so it wouldn't have to issue as many new Treasury notes

Deficit by Year Since 1929

The deficit since 1929 is compared to the increase in the debt, nominal GDP, and national events in the table below. The debt and GDP are given as of the end of the third quarter, specifically Sept.

30, in each year. That coincides with the budget deficit's fiscal year. But GDP in the years up to 1947 are not available for the third quarter, so year-end figures are used.  

The first column represents the fiscal year, followed by the deficit that year in billions. Next is the debt increase by fiscal year, followed by the deficit/GDP. Finally, the events affecting the deficit are cited. 

Fiscal YearDeficit (in billions)DebtDeficit/GDPEvents
1929($1)($1) (0.7%)Market crash
1930($1)($1) (0.8%)Smoot-Hawley
1931$0$1 0.6%Dust Bowl
1932$3$3 4.5%Hoover tax hike
1933$3$3 4.5%FDR New Deal
1934$4$5 5.4%GDP up 10.8%, debt also rose.
1935$3$2 3.8%Social Security
1936$4$5 5.1%Tax hikes 
1937$2$3 2.4%Depression returned, third New Deal
1938$0$1 0.1%Dust Bowl ended
1939$3$3  3.0%Depression ended
1940$3$3  2.8%Defense increased
1941$5$6  3.8%Pearl Harbor
1942$21$23 12.3%Battle of Midway
1943$55$6426.9%Defense tripled
1944$48$64 21.2%Bretton Woods
1945$48$58 20.%WWII ended
1946$16$11  7.0%Recession
1947($4)($11) (1.6%)Cold War
1948($12)($6) (4.2%)Recession
1949($1)$0 (0.2%)Recession
1950$3$5  1.0%Korean War
1951($6)($2) (1.7%)Expansion
1952$2$4  0.4%Expansion
1953$6$7  1.7%Korean War ended, recession
1954$1$5  0.3%Recession, Eisenhower budgets
1955$3$3  0.7%Expansion
1956($4)($2) (0.9%)Expansion
1957($3)($2) (0.7%)Recession
1958$3$6  0.6%Recession ended
1959$13$8  2.4%Fed raised rates
1960$0$2 (0.1%)Recession
1961$3$3  0.6%JFK & Bay of Pigs
1962$7$10  1.2%Cuban Missile Crisis
1963$5$7  0.7%U.S. aids Vietnam, JFK killed
1964$6$6  0.9%LBJ War on Poverty
1965$1$6  0.2%Medicare, Medicaid, Vietnam War 
1966$4$3  0.5% 
1967$9$6  1.0%Expansion
1968$25$21  2.6%Moon landing
1969($3)$6 (0.3%)Nixon took office
1970$3$17  0.3%Recession
1971$23$27  2.0%Wage-price controls
1972$23$29  1.8%Stagflation
1973$15$31  1.0%End of gold standard
1974$6$17  0.4%Budget process created, Watergate
1975$53$58 3.1%Ford budget, Vietnam War ended
1976$74$87  3.9%Stagflation
1977$54$78  2.5%Stagflation
1978$59$73  2.5%Carter budget, Recession
1979$41$55  1.5%Recession
1980$74$81  2.6%Volcker raised rates to 20%
1981$79$90  2.4%Reagan tax cut
1982$128$144  3.8%Reagan increased spending
1983$208$235  5.6%Jobless rate was 10.8%
1984$185$195  4.5%Increased defense spending
1985$212$256  4.8%Increased defense spending
1986$221$297  4.8%Tax cut
1987$150$225  3.1%Market crash
1988$155$252  2.9%Fed raised rates
1989$153$255  2.7%S&L Crisis, Bush 41 budget
1990$221$376  3.7%Desert Storm
1991$269$432  4.3%Recession
1992$290$399  4.4%Expansion
1993$255$347  3.7%Clinton signed Budget Act
1994$203$281  2.8%Clinton budget
1995$164$281  2.1%Expansion
1996$107$251  1.3%Welfare reform
1997$22$188  0.3%Expansion
1998($69)$113 (0.8%)LTCM crisis, recession.
1999($126)$130 (1.3%)Glass-Steagall repealed
2000($236)$18 (2.3%)Surplus
2001($128)$133 (1.2%)9/11 attacks, EGTRRA
2002$158$421  1.4%War on Terror
2003$378$555  3.3%JGTRRA
2004$413$596  3.4%Iraq War
2005$318$554  2.4%Katrina, Bankruptcy Act
2006$248$574  1.8%Bernanke chairs Fed
2007$161$501  1.1%Bank crisis
2008$459$1,017  3.1%Bank bailout, QE
2009$1,413$1,632  9.8%Stimulus Act. Bank bailout cost $250B, ARRA added $241.9B
2010$1,294$1,905  8.6%Obama tax cuts, ACA, Simpson-Bowles
2011$1,300$1,229  8.3%Debt crisis, recession and tax cuts reduced revenue
2012$1,087$1,276  6.7%Fiscal cliff
2013$679$672  4.0%Sequester, government shutdown
2014$485$1,086  2.7%Debt ceiling
2015$438$327  2.4%Defense = $736.4B
2016 $585$1,423  3.1%Defense = $767.6B
2017$665$672  3.4%Defense = $817.9B
2018 (est)$779$1,217  4.0%Defense = $890.8B. Trump tax cuts
2019 (est)$1,091$1,314  n/aDefense = $956.5B
2020(est)$1,101$1,281  n/aDefense = $989B
2021 (est)$1,068$1,276  n/an/a

Resources for Table

  • Deficit from 1929 to 2017: , Table 1.1, Office of Management and Budget. 
  • Deficit from 2018 to 2021: , Table S-4, Office of Management and Budget.
  • Debt from 1929 to 2018: U.S. Treasury  and U.S. Treasury, .
  • Debt from 2019 to 2021: FY 2020 budget, , Table 4-2. Federal Government Financing and Debt.
  • , Table 1.1.5., U.S. Bureau of Economic Analysis