President Donald Trump and his two immediate predecessors are the three presidents who have run the largest budget deficits in U.S. history. But almost every president in the past half-century has run a record budget deficit at least for a time.
The Rise of Deficit Spending
During the first half of the 20th century, the largest budget deficits were seen during the two world wars, and, relative to the size of the economy, the largest budget deficits in history were seen during World War II. While the United States has run a budget deficit nearly every year since 1961, the deficits really began to balloon during the 1970s and 1980s.
President Ronald Reagan took office in 1981 vowing to limit the size of government, but during his eight years, the nation's deficit roughly doubled and topped $200 billion several times. Reagan's successor, George H.W. Bush, also presided over a record-breaking deficit, of $290 billion in 1992.
- Donald Trump and his two immediate predecessors are the three presidents with the biggest budget deficits in history.
- The deficit is expected to top $1 trillion in 2020. In 2021, the spending required for the nation to recover from the COVID-19 epidemic will likely have an even greater effect on the deficit.
- The U.S. government has run a budget deficit for nearly all of the past 60 years.
Achieving a Budget Surplus
Under pressure from Republicans in Congress, President Bill Clinton agreed to consistently cut the deficit and eventually oversaw the first budget surplus in decades. The surplus stood at $236 billion in 2000, Clinton's final year in office. The $128 billion surplus recorded in 2001 was the last time a surplus has been seen this century.
Return to Record Deficits
When he took office in 2001, President George W. Bush cited the Clinton surplus as evidence that taxes were too high. He pushed through major tax cuts and oversaw an increase in spending, and the combination again drove the U.S. budget into the red. The deficit reached a record $458 billion in 2008, Bush's last year in office, and would triple the following year as the Bush and Obama administrations faced the Global Financial Crisis.
How the Budget Process Works
When talking about presidents and budget deficits, it's important to keep some things in mind. First, while a president proposes an annual budget, Congress must approve all spending. The president's power over the budget is never absolute and can be severely limited if the opposition party holds a majority in either the House of Representatives or the Senate.
Another thing to know is that "discretionary" spending accounts for only about a third of the typical U.S. budget. The majority is "mandatory" spending—that is, dictated by law. The biggest sources of mandatory spending are Medicare and Social Security.
In addition, the federal fiscal year runs from Oct. 1 to Sept. 30. This means that during a new president's first year in office, the budget that is in place was passed during their predecessor's term, although incoming administrations can request additional spending upon taking office.
The Deficit Tops $1 Trillion
The U.S. budget deficit exploded in fiscal year 2009, ultimately reaching $1.4 trillion as the Bush and then incoming Obama administrations struggled to contain the economic fallout from the financial crisis. Most of that deficit was created on Bush's watch, but Obama and the Democratic-controlled Congress added hundreds of billions of dollars to it in early 2009.
The deficit would remain above $1 trillion through the 2012 fiscal year, but would be slashed to as low as $440 billion in the later years of Obama's presidency.
Relative to the size of the nation's economy, the biggest U.S. deficits in history were seen during World War II.
Trump's Budget Deficit
President Trump continued the trend of pushing the deficit higher as he sought massive tax cuts and increased defense spending. His first budget, for the 2018 fiscal year, recorded a deficit of $779 billion.
Under Trump, the deficit reached $984 billion in 2019 and was expected to top $1 trillion in 2020, and that was before Congress passed a $2 trillion stimulus package to fight the economic fallout from the coronavirus pandemic.