US Budget Deficit by Year, Compared to GDP, Debt Increase, and Events

Is the U.S. Deficit Really That Bad?

Deficit by year
••• Photo by Ron Sachs-Pool/Getty Images

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 budgeted at $1.1 trillion. 

That's the largest deficit since 2012. Back then, spending was high to combat the 2008 financial crisis. At the same time, tax receipts had dropped due to the recession. In FY 2020, revenues are estimated to be the highest in U.S. history.

But President Donald Trump and Congress have ramped up deficit spending to pay for the record-high levels of military spending. Social Security and Medicare are mandatory programs that are also expensive. But they have payroll tax revenues to cover most of their expenses.

Deficit Trends

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

Each year's deficit adds to the national debt. That comparison is called the debt-to-GDP ratio. If the ratio is more than 77 percent, then the country reaches a tipping point. That's where lenders start worrying about whether it's safe to buy the country's bonds. High deficits push the country toward that tipping point.

Since 1987, the deficit has been a lot less than the increase in the debt. Congress began borrowing from a surplus in the Social Security Trust Fund. The  by the baby boomer generation.

While they were in their 20s and 30s, there were more working people than retirees. Their  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

In the table below, the deficit is compared to the increase in the debt, nominal GDP, and national events since 1929.

Please note that the debt and GDP are given as of the end of the third quarter, specifically September 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.  

U.S. Deficit Since 1929 Compared to Increase in Debt, Deficit/GDP, and Major Events

Fiscal Year Deficit   (in billions)Debt Increase (by FY) Deficit /GDPEvents Affecting Deficit
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%
1935$3$2 3.8%Social Security
1936$4$5 5.1%Tax hikes 
1937$2$3 2.4%Depression returned
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%
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%Expanson
1953$6$7  1.7%Korean War ended
1954$1$5  0.3%Recession
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
1966$4$3  0.5%Vietnam War continues
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
1975$53$58 3.1%Ford budget
1976$74$87  3.9%Stagflation
1977$54$78  2.5%Stagflation
1978$59$73  2.5%Carter budget
1979$41$55  1.5%Volcker raised rates to 20%
1980$74$81  2.6%Recession
1981$79$90  2.4%Reagan tax cut
1982$128$144  3.8%Reagan budget
1983$208$235  5.6%Jobless rate 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
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 Reconciliation 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
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
2010$1,294$1,905  8.6%Obama tax cuts / ACA / Simpson-Bowles
2011$1,300$1,229  8.3%Debt crisis
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 = $736.4 b
2016 $585$1,423  3.1%Defense = $767.6 b
2017$665$672  3.4%Defense = $817.9 b
2018 (est)$779$1,217  4.0%Defense = $890.8 b
2019 (est)$1,091$1,314  n/aDefense = $956.5 b
2020(est)$1,101$1,281  n/aDefense = $989 b
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
  • Historical Fed Funds Rate
  • History of Dow Closing Average
  • History of Recessions

More History