While many U.S. presidents have run budget deficits for most if not all of their years in office, there are a few who have far exceeded their peers. President Donald Trump and his two predecessors have run the largest deficits in history. Prior to that, the largest annual budget deficit was reported by George H. W. Bush in 1992.
The Largest Deficits
The U.S. government started the 21st century strong with two years of surpluses in 2000 and 2001, but it hasn’t seen a surplus since then. Over the last 17 years through 2018, the U.S. government budget has averaged an annual deficit of $638.403 billion. The largest annual deficits ever were achieved by the Obama Administration in 2009, 2011, and 2010 when the deficits reached $1.413 trillion, $1.300 trillion, and $1.294 trillion, respectively.
During Obama’s eight years of presidency, he accumulated deficits totaling $7.27 trillion. Over his eight years in office that averaged out to $909 billion annually.
Preceding Obama, President George W. Bush reported a leading annual budget deficit of $458.6 billion in 2008. George W. Bush reported budget deficits in seven of his eight years in office with total budget deficits of $2.134 trillion.
President Trump has continued the budget deficit trend. In 2017, the deficit was $665.4 billion followed by a deficit of $779.1 billion in 2018. Estimates show that the budget deficit under President Trump is expected to keep rising. The budget deficit is expected to top $1 trillion in 2019 and remain above $1 trillion through 2022.
Throughout U.S. history, budget deficits have not been uncommon though they have occurred on a much smaller scale. Preceding Trump, Obama, and George W. Bush, the next highest annual budget deficit was recorded by George H. W. Bush, Senior in 1992. In 1992, the federal budget deficit totaled $290.3 billion.
Source: St. Louis Fed
The U.S. Federal Budget
The U.S. federal budget is broken down into three large categories. These categories include mandatory spending, discretionary spending, and interest on the federal debt.
Mandatory spending usually accounts for the greatest portion of the budget. It includes permanent programs with spending that varies based on eligibility. Discretionary spending accounts for approximately 30%. This spending is broken out into defense and nondefense.
Finally, the government must pay for interest costs on the debt it borrows to cover its gap between revenues and expenses.
Not So Black and White
While looking at budget deficits annually and comprehensively over each president's term to see where the largest deficits have occurred seems to be common sense on the surface, the responsibility for the budget and the various circumstances that each president must deal with are not so black and white. The president does have the primary responsibility of presenting an annual budget each year to Congress.
However, from there, Congress has to vote to approve the U.S. budget and the allocation of government spending. This can result in a long negotiation process for things such as economic stimulus packages or affordable health care, which add to the deficit. It can also result in a government shutdown if a budget is not agreed upon and authorized by all necessary parties before October 1.
As mentioned, mandatory spending is already built into the budget for national programs such as Social Security, welfare, and Medicare. These programs are acts of Congress and would require further acts to amend or eliminate. Discretionary spending varies by year.
The Federal Fiscal Year
It’s also important to keep in mind that the federal fiscal year runs from October 1 to September 30. This means that for the first nine months a new president is in office (from January to September), he is working with the budget laid down by his predecessor.
In years when a new president is elected, there are two plans at work: the old plan laid out by the previous administration and the new plan brought in by the new president. The single-largest budget deficit in U.S. history happened during such a collaborative year. The 2009 fiscal year clocked a $1.413 trillion deficit. For the first nine months of that year, President George W. Bush’s budget was in effect while Obama held the role of president.
- President Obama reported deficits totaling $7.27 trillion during his eight years of presidency.
- George W. Bush also tops the presidency deficits list with total budget deficits of $2.134 trillion during his presidency.
- The highest annual budget deficit in history was during the first year of the Obama Administration in 2009, which reported a budget deficit of $1.413 trillion.
In October 2008, after Bush's budget was approved for the 2009 fiscal year, the Dow dropped dramatically, recording three of its 10 worst days in a single month. After Obama took office, fears of a looming recession encouraged Congress to pass an economic stimulus package, immediately adding a further $253 billion to Bush's already-approved budget, and making the $1.413 trillion deficit the work of two administrations.