Deficit History 1960 to Present

I got to reading an article about our declining deficit and how it has helped slow the nation’s economic recovery. The projected deficit for FY 2015 is slightly over $700 billion which is half what it was deficit graph 0707when President Obama came to office in 2009. We all know that the  Bush Era recession was the worst in history and that the recovery has also been one of the slowest (not counting the Great Depression).

Our huge deficits during the first term of the Obama Administration can be attributed to at least seven  things; the financial collapse in 2007-08, the loss of federal tax revenue, the bailout of the automobile and banking industries, the Obama stimulus package, increased mandatory spending on such things as Social Security and Medicare, and finally, the cost of 9/11 which includes a huge investment in homeland security and two lengthy foreign wars.

The Office of Budget and Management (OMB) is projecting $400 billion deficits through the year 2024 and most economist don’t think that is a negative other than it represents less government stimulus in economic growth which could continue to throttle economic recovery.

Deficits are a reality of life in modern America. Between 1789 and 1959 the total of all federal deficits was $232 billion. While that may sound wonderful it also represents little government stimulus and frequent recessions and depressions. In modern times government spending has become an accepted means by which to steer the economy.

I gathered together a list of annual deficits from 1960 to the present and found several things of interest. First is how small the deficits were during the War on Poverty and Vietnam War years was. I’m supposing that much of that can be attributed to higher government revenues generated by higher tax rates. Look what begins to happen when Reagan comes to office and “tax breaks” becomes the conservative mantra.

The deficit grew enormously under Reagan and Bush I and the causes could include increased spending on the Cold War, the beginnings of outsourcing, and the first Gulf War. During the Clinton years the deficit began to shrink and eventually turned into surplus. While there can be many explanations they have to include economic growth, higher taxes, and greater government tax income.

And then comes G.W. and all the havoc he inflicted on the economy including the trillion-dollar deficits of the opening Obama years.

When considering all of this bear in mind that several Nobel Laureate economists worry about bringing down the deficit too quickly as well as not doing enough to stimulate the economy. Several, including myself, never thought the original stimulus package was enough or that it targeted the right things.

I am not an economist and there may be many things I’ve missed or overlooked. If nothing else, however, what I’ve covered here is sufficient to show just how complex the subjects is and that no single political party is free of creating huge deficits. But don’t forget that the never conceding responsibility Dick Cheney famously said, “Reagan proved that deficits don’t matter.”

(UPDATE: Since I originally wrote this piece the US Treasury Department has announced a $71 billion surplus for June of 2014 and is predicting a final deficit for the fiscal year of $492 billion, the lowest since the Great Recession. Also, government revenue is up 8% and spending has increased by 1%.)

FY 2014 – $649 billion. – Obama
FY 2013 – $680 billion. – Obama
FY 2012 – $1.087 trillion. – Obama stimulus spending
FY 2011 – $1.299 trillion. – Obama stimulus spending
FY 2010 – $1.294 trillion. – Obama stimulus spending
FY 2009 – $1.413 trillion. – Obama stimulus spending
FY 2008 – $459 billion. – G.W. Bush – 9/11, unfunded tax cuts, unfunded increases in Social Security Part D, further deregulation, invasion of Afghanistan, invasion of Iraq, collapse of Wall Street and housing market
FY 2007 – $161 billion. – G.W. Bush
FY 2006 – $248 billion. – G.W. Bush
FY 2005 – $318 billion. – G.W. Bush
FY 2004 – $413 billion. – G.W. Bush
FY 2003 – $378 billion. – G.W. Bush
FY 2002 – $158 billion. – G.W. Bush
FY 2001 – $128 billion surplus. – Clinton years
FY 2000 – $236 billion surplus. – Clinton years
FY 1999 – $126 billion surplus. – Clinton years
FY 1998 – $69 billion surplus. – Clinton years
FY 1997 – $22 billion. – Clinton years
FY 1996 – $107 billion. – Clinton years
FY 1995 – $164 billion. – Clinton years
FY 1994 – $203 billion. – Clinton years
FY 1993 – $255 billion. – G.H.W. Bush carryover deficit
FY 1992 – $290 billion. – G.H.W. Bush
FY 1991 – $269 billion. – G.H.W. Bush
FY 1990 – $221 billion. – G.H.W. Bush
FY 1989 – $153 billion. – G.H.W. Bush
FY 1988 – $155 billion. – Reagan
FY 1987 – $150 billion. – Reagan
FY 1986 – $221 billion. – Reagan
FY 1985 – $212 billion. – Reagan
FY 1984 – $185 billion. – Reagan
FY 1983 – $208 billion. – Reagan
FY 1982 – $128 billion. – Reagan
FY 1981 – $79 billion. – Reagan
FY 1980 – $74 billion. – Reagan
FY 1979 – $41 billion. – Carter
FY 1978 – $59 billion. – Carter
FY 1977 – $54 billion. – Carter
FY 1976 – $74 billion. – Carter
FY 1975 – $53 billion. – Ford
FY 1974 – $6 billion. – Ford/Nixon
FY 1973 – $15 billion. – Nixon
FY 1972 – $23 billion. – Nixon
FY 1971 – $23 billion. – Nixon
FY 1970 – $3 billion. – Nixon
FY 1969 – $3 billion surplus. – Nixon
FY 1968 – $25 billion. – Johnson
FY 1967 – $9 billion. – Johnson
FY 1966 – $4 billion. – Johnson
FY 1965 – $1 billion. – Johnson
FY 1964 – $6 billion. – Johnson
FY 1963 – $5 billion. – Kennedy
FY 1962 – $7 billion. – Kennedy
FY 1961 – $3 billion. – Kennedy
FY 1960 – $.3 billion surplus. – Eisenhower carryover surplus

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