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.
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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. |
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These tables use scientific notation:
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| The raw data: |
| Office of Management & Budget: Home |
| fiscal year 2004 pdf |
| fiscal year 2004 reports |
| fiscal year 2002 reports |
| US Government Printing Office |
| 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.
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| 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.
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| 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. | |
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| 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. | |
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| 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. | |
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| 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. | |
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| From Johnson until Clinton spending rises faster than revenues. So the deficit increases. | |
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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. |
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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.) |
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During this time, spending continues to increase slightly faster than revenues. |
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| 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 |
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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. |
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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. |
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