The Federal Budget and Deficit

a review of the presidencies of the 20th century


Part 1: The century overview

We have heard many claims about the deficit. This page is provided to make data regarding the federal budget and the federal deficit more accessible.

 

It is easy to see that the greatest increases in both the budget and the deficit were WWI and WWII, and the only era that the deficit actually decreased noticeably was between WWI and the Great Depression.

As we look at the graphs below, recall there are two factors to the deficit: revenues received and money spent. Increasing deficits are caused either by a drop in revenues or an increase in expenditures.

 

These tables use scientific notation:

  • 1.0E+9 = 1 billion
  • 1.0E+10 = 10 billion
  • 1.0E+11 = 100 billion
  • 1.0E+12 = 1 trillion
  • 1.0E+13 = 10 trillion.

 

The raw data:

the deficit

Office of Management & Budget: Home
fiscal year 2004 pdf
fiscal year 2004 reports
fiscal year 2002 reports
US Government Printing Office

budget publications

bureau of labor statistics
Census Bureau
Federal Reserve
IRS home
statistics
 
Part 2: The Presidencies

Most Americans believe that the president has primary power over both the federal budget and the economy as a whole. Both these assumptions are very doubtful, since congress sends the bills to the whitehouse, and the economy fluctuates with federal reserve policy, and external forces. None the less, we will review the budget by the presidencies.

For these graphs "tax hike" means a revenue increase resulting from any cause including improved economies and rate hikes.
  Wilson
The Wilson presidency was characterized by the creation of the Federal Reserve, the legitimizing of the Federal Income Tax, and WWI. During WWI, and then again WWII, we see the worst deficit in the 20th century, peaking at over 46% during the war. Since the spending increase is significantly larger than the revenue increase the deficit increases.

The left graphs show Federal revenues and spending.

The right graphs show the percent tax hike, percent spending hike and percent deficits for each year. At the end of each graph the term averages are shown.

 

  Coolidge & Hoover
The Coolidge presidency was the only 20th century era with decreasing deficit and decreasing taxes. Here, spending decreased faster than revenue so a surplus occurs.

Note: in a previous version of this page the deficit was calculated as, "What percent of revenues was spending?" Now we are using the more standard, "What percent of spending was revenues?"
  Roosevelt
Between the Great Depression and WWII, Roosevelt faced greater challenges than any other president. Between these two events the country nearly went bankrupt. None the less, one should ask, "When the people were impoverished and businesses were going under, wouldn't a 20% tax hike only make things more challenging?" Although taxes increased rapidly during this administration, spending increased much faster creating the largest enduring deficit ever.

 
  Truman
During most of the Truman presidency decreased spending kept the budget balanced. Since revenues dropped slower and rose faster than spending a balanced budget occured.

 
  Eisenhower
 

 
  Kennedy - Johnson
The Johnson presidency saw the creation of the Great Society programs, the escalation in Vietnam, and the joining of the Social Security budget to the general budget. From this point forward, the social security surplus gets added into the general budget making the deficit appear smaller than it actually is. Here, revenue increases lag behind spending increases, so the deficit grows.

 
  Nixon
From Johnson until Clinton spending rises faster than revenues. So the deficit increases.

 
  Ford and Carter

The Ford and Carter years are the years of the Arab Oil Embargo and run away inflation. During these years spending and revenue rise at about the same rate, but revenue was already behind spending, so the deficit persisted at about the same rate.

* Due to a change in budgeting in 1976 the percent estimates will be inaccurate for 1976 and 1977.


 
  Reagan

The Reagan years began with a tax cut. That was never matched by a spending cut. After that, revenues never caught up with spending. This resulted in the largest deficit since WWII.

(The tax cuts were given primarily to the wealthy.)


 
  Bush Sr.

During this time, spending continues to increase slightly faster than revenues.


Related Pages
Federal Outlays since 1962
Federal Income Tax in 1999
Tax Equity
Minimum Wage Alternative
Income Inequity
Incomes of the 1980s
Federal Spending Trends
  Clinton

During the Clinton years, a strong economy persisted, and part of the the tax on the rich that existed before Reagan was resumed. These things caused tax revenue to increase slightly faster than spending. One pundit observed that the gridlock created by having a Republican congress with a Democratic president prevented spending from increasing any faster.


 
  GW Bush

George W. Bush, along with the Republican congress increased discresionary spending 26%, the largest increase since WWII. They also decreased revenues with a large tax cut given primarily to the rich. This combination led to the worst increase in the deficit since WWII.


Preliminary estimates.
  The Averages by President
President Average Revenue Change Average Spending Change Average Deficit
Wilson
pre-war
WWI
overall
.
3
87
45
.
1
176
88
.
0
46
23
Coolidge
-6
-8
-27
Hoover
-14
12
16
Roosevelt
Great Depression
WWII
overall
.
20
42
30
.
12
58
33
.
28
50
44
Truman
7
1
-4
Eisenhower
5
4
3
Kennedy
5
7
5
Johnson
8
10
6
Nixon
9
7
5
Ford
10
13
11
Carter
13
13
12
Reagan
7
8

19

Bush Sr.
5
7
18
Clinton
8
3
3
GW. Bush
3
7
11
 
This page is not adjusted for inflation. Look here to see this data calibrated for inflation.

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Last updated July 10, 2007

 

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