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

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 surplus was created by the baby boomer generation.

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

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

Resources for Table

• Deficit from 1929 to 2017: Historical Tables, Table 1.1, Office of Management and Budget. 
• Deficit from 2018 to 2021: FY 2020 Budget, Table S-4, Office of Management and Budget.
• Debt from 1929 to 2018: U.S. Treasury Historical Tables and U.S. Treasury, Debt to the Penny.
• Debt from 2019 to 2021: FY 2020 budget, Analytical Perspectives, Table 4-2. Federal Government Financing and Debt.
• GDP and Personal Income, Table 1.1.5., U.S. Bureau of Economic Analysis
• Historical Fed Funds Rate
• History of Dow Closing Average
• History of Recessions
• Cost of Wars

More History

• Debt by President
• Deficit by President
• U.S. GDP by Year
• GDP Growth Rates by Year
• Unemployment Rate by Year
• Inflation by Year
• Gold Prices by Year