U.S. 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 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 surplus was created 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. 

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
• Cost of Wars