Deficits and Surpluses
A government incurs a budget deficit when it spends more than it receives. For example, if a government spends $7 trillion and it receives $5 trillion from tax revenue and other sources, it incurs a deficit of $2 trillion.
A government runs a budget surplus when it receives more than it spends. For example, if a government spends $4 trillion and receives $5 trillion in revenue, it runs a surplus of $1 trillion.
For up-to-date statistics on recent United States deficits and surpluses, please click HERE (scroll down to “Budget”), and then click on the link for the budget figures.
A budget deficit is often confused with a nation’s national debt. Budget deficits and surpluses are yearly figures, whereas national debts represents the accumulation of all past deficits and surpluses. Debt trends are covered in Sections 2 and 3 of this unit.
Video Explanation
For a video explanation of deficit and debt calculations, please visit:
The Clinton Surpluses
Since the 1930s, United States federal budget deficits have occurred much more frequently than budget surpluses. After World War II, only in 1969 and during the latter years (1998 through 2000) of the Clinton administration did the United States experience budget surpluses. Deficits turn into surpluses when either government spending decreases or government revenue increases, or both happen. During the Clinton administration, federal government spending increased, but at a modest pace. Because of strong economic growth, tax revenue increased more than spending increased, and subsequently, the United States government ran a budget surplus.
The Bubble that Burst
Central banks around the world increased their nations’ money supply more than they should have, and this was mostly reflected in increasing asset prices (stocks, housing). These wealth gains stimulated the economy temporarily. However, the significant asset price increases also led to the housing bubble that burst in 2008 and eventually caused much economic hardship and record deficits.
The Recent Record Deficits
In the United States, increased government spending, primarily due to significant defense and homeland security spending, increased spending on Social Security, Medicare, and Medicaid, contributed to significant deficits. In addition, recently, due to significant pandemic spending, the United States incurred deficits of nearly $3 trillion in 2020 and 2021. In 2023 the deficit was $1.7 trillion.
Budget Deficits and Surpluses as a Percentage of Gross Domestic Product
Below is a table with data on United States budget deficits and surpluses in billions of dollars from 1980 through 2023. Deficits are expected to be a serious problem in the future as net interest payments on the debt will rise with growing deficits. Spending on defense and homeland security will remain high. An additional problem is that as more and more baby-boomers (the first ones reached full retirement age in 2011) elect to draw from Social Security and sign up for Medicare (or similar programs in other countries), they will further burden nations’ national debts. The Obama administration expanded health care coverage for many uninsured. This also added significant expenses to our government’s budget.
| Fiscal Year | Deficits (numbers with a minus sign) and Surpluses (numbers with a plus sign) in Billions of Dollars |
| 1980 | -74 |
| 1981 | -79 |
| 1982 | -128 |
| 1983 | -208 |
| 1984 | -185 |
| 1985 | -212 |
| 1986 | -221 |
| 1987 | -150 |
| 1988 | -155 |
| 1989 | -153 |
| 1990 | -221 |
| 1991 | -269 |
| 1992 | -290 |
| 1993 | -255 |
| 1994 | -203 |
| 1995 | -163 |
| 1996 | -107 |
| 1997 | -22 |
| 1998 | +69 |
| 1999 | +126 |
| 2000 | +236 |
| 2001 | +128 |
| 2002 | -158 |
| 2003 | -378 |
| 2004 | -413 |
| 2005 | -318 |
| 2006 | -248 |
| 2007 | -161 |
| 2008 | -459 |
| 2009 | -1,413 |
| 2010 | -1,295 |
| 2011 | -1,300 |
| 2012 | -1,087 |
| 2013 | -973 |
| 2014 | -485 |
| 2015 | -438 |
| 2016 | -585 |
| 2017 | -665 |
| 2018 | -833 |
| 2019 | -1,091 |
| 2020 | -3,132 |
| 2021 | -2,770 |
| 2022 | -1.380 |
| 2023 | -1.700 |
Source: https://fiscaldata.treasury.gov/americas-finance-guide/national-deficit/#us-deficit-by-year