Federal deficit: Trail of broken promises

In the October 29, 2009 CNNMoney article "Federal deficit: Trail of broken promises," Jeanne Sahad reports that "Republicans and Democrats rage about the long-term deficit, as if they had nothing to do with it. But both parties undermine efforts to get it under control."

NEW YORK (CNNMoney.com) -- When it comes to figuring out what has caused the country's record accumulation of debt, just about every politician in Washington has a theory.

The theories usually boil down to this: The other guy did it. The other party's White House. A previous Congress. You get the picture.

In reality, growing the deficit has been very much a bipartisan effort. Members of Congress from both parties and presidents past and present have all contributed to the problem.

And it is a problem. By 2019 the total debt accrued over the past several decades is on track to approach an unhealthy 82% of gross domestic product. That's one reason why those who own U.S. debt and credit ratings agencies will be looking for lawmakers to put together a plausible deficit-reduction plan in the next few years. (Clock is ticking on debt ceiling.)

But if Congress and the president are going to stick to it, they better curb the budget trickery. Here are 5 common tricks that undermine fiscal responsibility.

Great idea! Let's ignore it.
The trick: Bypass rule to rein in spending and then overturn it

In 1997, Congress passed a provision that aimed to limit overall Medicare spending. When spending exceeds a certain target, an automatic reduction in physicians' reimbursement fees kicks in -- unless lawmakers act to block the reduction.

And they do, almost every time a cut to doctors is in the offing.

They usually don't bother to cut spending or raise revenue elsewhere to make up for it. And when they do, they aren't exactly realistic about it.

Four years ago, they decided to pay for rescinding a cut by promising to cut rates even more steeply in the future, said Donald Marron, an acting director of the Congressional Budget Office during the last Bush Administration.

Well, welcome to the future. Those steeper rate cuts aren't flying either. Lawmakers now want to pass a permanent "fix" so that physician payment rates don't drop. The estimated cost of doing so: $247 billion over 10 years.

The proposal was voted down last week in part because there were no provisions in the bill to pay for the cost. But don't expect that to be the end of it.

How about a quickie?
The trick: Enact a one-year "fix" that really fixes nothing

Few lawmakers want to see physician rates cut. They need physicians' support for health reform and there is concern that more physicians would refuse to treat Medicare patients if their rates are cut further.

So lawmakers may just pass another one-year fix to prevent near-term cuts, just like they've done in years past.

The one-year "fix" for perennial issues makes the cost of what Congress is doing look less expensive because well, it's only for one year, right?

The classic example is how Congress deals with the pernicious Alternative Minimum Tax. Without congressional action, an increasing number of middle class families will have to pay the tax, originally created to extract tax payments from the wealthy.

So every year Congress enacts a "patch" to protect those middle-class families. Those one-year patches have recently cost in the neighborhood of $70 billion. A permanent patch, which President Obama has called for, would cost at least $448 billion over 10 years, according to the Congressional Budget Office.

Let's play make-believe
The trick: Count on future taxes everyone knows will never be collected

The AMT patches are not paid for through reduced spending or increased revenue elsewhere.

The argument is that the AMT was never supposed to hit so many people and generate so much revenue. So why pay for the loss of revenue that was never supposed to be collected in the first place?

It's a good theory. The problem is that Congress, in deciding which policies to pursue, uses budget and deficit projections that assume the AMT will raise lots and lots of revenue.

As a result that phantom AMT revenue makes the deficit look better than it is.

While the estimated cost of permanently patching the AMT is $448 billion, the real price goes up by hundreds of billions if it's done in conjunction with extending the 2001 and 2003 tax cuts. And odds are high they will be extended.

This is just temporary. Honest.
The trick: Call a tax cut or spending hike temporary

Like the one-year fix, implementing a "temporary" tax cut or spending increase often disguises the true cost, since there will be pressure to make the measure permanent -- or to "temporarily" renew it every year.

"There's a ton of effort to get things into law because once there, they're hard to get rid of," said Marron, who is now a visiting professor at the Georgetown Public Policy Institute.

The 2001 and 2003 Bush tax cuts are a good example.

No one really expected the cuts to expire, even though they're slated to do so by 2011. In fact, President Obama has called for them to be made permanent for the majority of Americans. The cost: $2.3 trillion in forgone revenue over the next 10 years.

We'll pay for everything ... except some things
The trick: Promise to pay for some tax cuts and not others

In a speech this week, Christina Romer, head of Obama's Council of Economic Advisers, pointed to research that found nearly half of the long-run fiscal shortfalls is due to the policies that cut taxes and increased spending under the Bush administration.

"Obviously, we can't go back eight years and make more responsible choices," she said.

Well, yes, the past is past.

But what about future choices? Obama has promised to pay for any new tax cuts or spending increases he proposes. Yet he is not calling on Congress to pay for his $2.3 trillion proposal to extend the Bush tax cuts.

By not doing so, he joins a not-so-select club of politicians, according to Diane Rogers, chief economist at the deficit watchdog group Concord Coalition.

"[T]he clever idea to hide the permanent costs of spending or tax cuts by making them temporary, and then later extending them while refusing to pay for the costs of extending them ... is something government policymakers have been practicing in a bipartisan manner for awhile," Rogers wrote in her blog EconomistMom.com.

Obama wants domestic spending cuts in next budget

In the November 14, 2009 article "Obama wants domestic spending cuts in next budget" Associated Press writers Tom Raum and Andrew Taylor outline the challenges of managing the current U.S. economy that needs short-term stimulus to fight the recession, but subsequently needs reduced budget deficits to minimize the burdensome effect of public debt on long-term economic growth.

WASHINGTON – The Obama administration, mindful of public anxiety over the government's mushrooming debt, is shifting emphasis from big-spending policies to deficit reduction. Domestic agencies have been told to brace for a spending freeze or cuts of up to 5 percent as part of a midterm election-year push to rein in record budget shortfalls.

Yet with the economy still in distress and unemployment pushing past 10 percent, prospects for making a dent in a trillion-dollar-plus annual deficit seem slight. And since the Pentagon and Department of Veterans Affairs would likely be shielded from such cuts, overtures toward trimming the deficit may hold more symbolic value than substance.

President Barack Obama is expected to make post-recession spending restraint a key theme of his State of the Union address in January and an important element of the budget he submits to Congress a few weeks later. He is under increasing pressure, including from moderate and conservative members of his own party, to show he is serious about tackling a deficit that has become both an economic and political liability.

Not since billionaire Ross Perot made budget-balancing the centerpiece of his 1992 third-party presidential bid has so much public concern been voiced over the gulf between what the government spends and what it takes in.

White House budget director Peter Orszag on Friday told The Associated Press it is imperative to start curbing the flow of red ink. But he called it a balancing act and said acting too fast could undercut what appears to be a fledgling economic recovery.

Orszag has said the spending blueprint, for the budget year that begins Oct. 1, 2010, would put the nation "back on a fiscally sustainable path" and suggested it would include a mix of spending cuts and new revenue-producing measures.

Democratic officials in the White House and on Capitol Hill say options for locking in budget savings include caps on the amount of money Congress gets to distribute each year for agency operating budgets. They spoke on condition of anonymity to frankly discuss internal deliberations.

The White House told agencies to submit spending plans that would, at the very least, freeze their budgets, and to prepare for cuts as high as 5 percent. That edict is but one round in internal administration deliberations on the budget. Cabinet heads are sure to seek exemptions, and Orszag warned that firm budget decisions haven't been made.

The administration also is weighing committing to debt reduction any unspent funds from the $700 billion bank bailout program. However, such a move would be largely a bookkeeping shift and not likely to yield much in the way of deficit reduction.

The new emphasis at the White House on deficit-reduction follows last month's report showing the economy surged at a 3.5 percent annual pace in the July-September quarter after contracting for four consecutive quarters. That suggested the recession is likely over — even though job losses are expected to continue for some time.

Congress will soon vote on legislation to raise the debt ceiling — the limit on how much the government can borrow — above the present $12.1 trillion. On Friday, the nation's overall debt stood at $11.99 trillion. Some fiscally conservative lawmakers have said they would not vote for further increases in the debt ceiling until the administration took deficit-cutting steps.

The national debt is the accumulation of annual budget deficits. The deficit for the 2009 budget year, which ended on Sept. 30, set an all-time record in dollar terms at $1.42 trillion.

The flow of red ink has been increased by war spending for Iraq and Afghanistan, recession-fighting stimulus and bank bailout spending and by reduced tax revenues from high unemployment and reduced personal and business income.

Polls show rising public concern over deficits. Exit polls from elections earlier this month showed clear majorities of Virginia and New Jersey voters said they were worried about the direction of the nation's economy. In both states, Republicans won gubernatorial seats that had been held by Democrats.

Republicans are seeking to capitalize on this month's Democratic election setbacks and rising voter concerns over the burst in federal spending. House Minority Leader John Boehner, R-Ohio, said the Democrats' "so-called `war on deficits' comes about a year late and more than a trillion dollars short."

"Spending in Washington has been out of control for years, and instead of changing it as they promised they would, Speaker Nancy Pelosi and President Obama have stepped on the accelerator," Boehner said in a statement.

Pollster Andrew Kohut, director of the Pew Research Center, said increasingly "the percentage of people naming the deficit as a problem is pretty substantial."

"It may be approaching the level of concern we had in the early 1990s when Ross Perot rode that horse for quite some time politically," Kohut said.

Still, politicians have typically avoided politically painful deficit-cutting steps in election years.

Stanley Collender, a budget expert at Qorvis Communications and a former staff aide to House and Senate budget committees, said if the administration could actually accomplish cuts in discretionary spending on the order of 5 percent — a big "if" — it would be a notable step toward bringing down deficits.

Despite today's hard times, putting such measures in play sooner rather than later makes sense since they wouldn't take effect until next Oct. 1, when jobs hopefully will be coming back and the economy humming again, Collender said. "It's sort of like an outfielder trying to catch a fly ball. You try to get to where the ball's going to be rather than where it is at that particular moment."

The deficit-cutting drive comes as Obama traveled to Asia where several nations, especially China, have expressed concerns about the size of U.S. deficits. China is the largest foreign holder of U.S. debt and policymakers worry that alarm over deficits could push foreigners into cutting back on their purchases of Treasury securities.

The Difficulty Balance Between the Short-Term Need to Stimulate the Economy and the Long-Term Need to Reduce Deficits & Debt

In the November 11, 2009 National Public Radio (NPR) article "Orszag: Deficit Can Help But Slows Recovery," Peter Orszag, the Director of the Office of Management and Budget, explains that budget deficits are appropriate fiscal policy for fighting recessions, but in the long run there is a need to reduce deficits and the public debt to avoid its burdensome impact on future economic growth.

White House budget director Peter Orszag has his hands full these days trying to wrangle down a deficit that has ballooned to an estimated $1.4 trillion. Part of that borrowing was necessitated by the recession, while part of it was designed to shorten the economic crisis.

Orszag says the federal deficit needs to be cut to about 3 percent of economic growth in the coming years to reduce the sea of debt. At the same time, the U.S. has to guard against sending the economy into a tailspin by pulling back too soon on stimulus programs.

Striking a balance is "extraordinarily challenging," Orszag tells NPR's Steve Inskeep.

But he says it's important to note that the economy has made significant progress in the past year.

"On the one hand, [you have] the GDP gap, the gap between how much the economy is producing and how much it could produce, and, on the other hand, these deficits," he says.

"If we only faced one or the other, the way forward would be clearer. But balancing between the two keeps me up at night."

Sometime around 2011 to 2013, "that's where we're going to start to need some transition from the extraordinary assistance that the federal government has been providing to try to jump-start the economy," he says. "We're working through [this], and we haven't made final decisions on the best path to walk down from where we are now to where we need to get."

He says the deficits needed to be wound down from their current 10 percent of the economy to "something around 3 percent" but that it should be "done in a way that avoids the risks of 1937 — where you pulled fiscal support away from the economy too quickly and threw the economy back into a recession."

The current era of high deficits is "exceptional times," notes Orszag, an economist who led the Congressional Budget Office before being tapped to head the Office of Management and Budget. In fact, he says, the national economic situation is more precarious than at any time in the past 50 years.

Orszag makes no apologies for not projecting a balanced budget anytime in the near-term: "You have to remember the situation that we inherited."

The Medicare Prescription Drug Benefit and the 2001 and 2003 tax cuts weren't paid for, he points out. That was compounded by the reduction in tax revenue from the economic downturn, the cost of the economic stimulus and the need for increased spending on unemployment benefits and food stamps.

"So, the point being, we inherited a big hole," Orszag says.

But he says the economy has been pulled back from the brink, and the past year has seen an amazing turnaround.

"I do think it's important to step back," he says. "If in November 2008, someone told you that credit spreads would be back to normal levels and the economy would be growing by 3.5 percent, you probably would have looked at them like they were a little bit crazy."

Orszag, who studied health care policy at the Washington-based Brookings Institution, says he thought the House and Senate health care legislation had "captured important opportunities."

"Given the need to actually enact legislation, we are doing about as much as could be done," he says.

But the budget chief is circumspect about the difficulty of getting budget priorities through Congress.

"The thing about the politics of the deficit is that the deficit is unpopular, but so are many specific steps to reduce it," Orszag says. "There are some that will decry the deficit but are unwilling to embrace anything that will actually bring it down."

Washington's selective deficit disorder

In the September 19, 2009 Salon article "Washington's selective deficit disorder," David Sirota reports that "they blew billions on wars and bailouts, but spending cash that actually helps people seems to bother politicians."

Watching the healthcare debate unfold these days is a little like watching scenes from "One Flew Over the Cuckoo's Nest" -- the ones showing a collage of strung-out, deranged or otherwise incapacitated patients rotting away in a squalid psychiatric ward.

As the insurance industry's Nurse Ratched lurks in the background, congressional Democrats cower in the corner, fearing the phantom menace of their own shadows. Standing next to the window, suicidal Republican leaders rant about "death panels" and threaten to splatter their electoral prospects onto the pavement below. Nearby, White House officials struggle with multiple-personality ailments as they mumble contradictory statements about the public option. Meanwhile, tea party protesters lie on the floor in a fetal position, soiling their hospital diapers as they throw incoherent tantrums about everything from socialism to communism to czarism to Nazism. And, not surprisingly, Washington reporters just stare off into the distance, having been long ago lobotomized in the wake of their Watergate heyday.

Clearly, the inmates in America's political sanitarium are each struggling with different maladies. However, they are all suffering from Selective Deficit Disorder -- an illness whose symptoms can be particularly difficult to detect.

When we see tea party activists bemoan deficit spending or watch rank-and-file senators like Blanche Lincoln, D-Ark., say, "I'm not going to vote for a [healthcare] bill that's not deficit-neutral," it is easy to think these poor souls are perfectly healthy. When President Obama promises to "not sign a [health] plan that adds one dime to our deficit" and then New York Times writers such as David Brooks praise this "dime standard" as the epitome of "pragmatism" and "fiscal sanity," these victims seem absolutely sane.

Yet, Selective Deficit Disorder is a sickness of omission. Attacking the neural synapses that maintain rudimentary logic, it presents itself not in what its carriers say and do, but in what they refuse to say and do.

Where, for instance, were conservative organizations marching on Washington when President Bush vastly expanded the deficit with his massive tax cuts for the wealthy? Where was Sen. Lincoln's concern for "deficit neutrality" when she voted to give $700 billion to the thieves on Wall Street? Where was Obama's "dime standard" when he proposed a budget that spends far more on maintaining bloated Pentagon budgets than on any universal healthcare proposal being considered in Congress? Where were demands for "fiscal sanity" by Brooks and other right-wing pundits when they cheered on the budget-busting war in Iraq? Where were any calls for raising taxes from these supposed "deficit hawks" when they backed all this profligate spending? And where were the journalists asking such painfully simple questions?

They were nowhere, because those plagued by Selective Deficit Disorder (as the name suggests) are only selectively worried about deficits.

When it comes to spending on priorities like healthcare reform that would help ordinary Americans, the illness's victims scream about deficits and overspending. But when it comes to handing over trillions of dollars to financial firms, defense contractors and other corporate interests, deficits suddenly don't matter to the disease-addled politicians, protesters and journalists underwritten by those interests.

Luckily, while almost every significant voice in politics is stricken with Selective Deficit Disorder, the majority of the country's citizens are not. That doesn't mean Americans love unbalanced budgets, of course. It just means we know there is something very wrong with those who decry deficit spending on healthcare for millions of people, but ignore far bigger deficit expenditures on giveaways to a tiny handful of fat cats.

Now, all we have to do is stop flying over the cuckoo's nest and start breaking into the asylum.

Deficit: What caused it, why it matters

In the July 30, 2009 CNNMoney article, "Deficit: What caused it, why it matters," Alan J. Auerbach and William G. Gale report that "the government is spending more than it's bringing in. A lot more. The result is a deficit. Here's why that gap must be brought under control."

WASHINGTON (CNNMoney.com) -- When George Bush took office at the beginning of 2001, the federal government was running a substantial budget surplus and projected rising surpluses "as far as the eye could see." Now, the United States is facing massive current deficits -- as a share of the economy, the largest since World War II -- and an increasingly dire and unsustainable outlook over the next 10 years and beyond.

How did we get into this fiscal mess? To quote a character in Ernest Hemingway's classic novel, "The Sun Also Rises," when asked by another how he lost his wealth, "Two ways. Gradually and then suddenly."

The gradual part was a series of policy actions adopted during the Bush administration. In 2001, the Congressional Budget Office projected that the 2008 budget would show a surplus equal to 4.5% of gross domestic product. The actual 2008 budget ran a deficit of 3.2% of GDP. Almost all of the reversal was the result of policy changes -- tax cuts and spending increases.

Then, in 2009, the bottom fell out.

Financial markets collapsed and the economy went into a free fall. While the economy is beginning to show signs of stabilizing, the deficit has deepened and is on course to be roughly 13% of GDP this year. About two-thirds of the swing is due to the troubled economy and the other third due to policy responses to the downturn.

During a strong cyclical downturn, big deficits are not just a necessary evil but can actually do a fair amount of good. So, while the current deficit is striking, it is not a problem in and of itself, especially if it falls to more typical levels in the next few years.

Looking into the future, it ain't pretty

The real problem is the medium- and long-term outlook.

Analysts have long emphasized that the country faces a long-term budget problem as a consequence of our rapidly growing old-age entitlement programs.

But now even the 10-year outlook is unsustainable. By 2019, even if everything goes the way the Obama administration wants, and the economy recovers and grows steadily over the next decade, the deficit will be 5.5% of GDP, an extremely high figure in good times, and the debt-to-GDP ratio will hit 82%, its highest level since just after World War II, and will keep rising.

And things aren't as likely to go as well as President Obama hopes. The economy has already performed worse than was assumed in the budget projections, and the projections are based on heroically optimistic assumptions about the political discipline Congress will impose on itself. And, of course, the problem will deepen, continually and inexorably, after 2019, as spending on Medicare, Medicaid and Social Security will grow rapidly.

Large chronic deficits are a serious economic problem. While much attention is given to the effect of deficits on interest rates, that effect is a symptom of a problem, not the problem itself.

If they are financed domestically, deficits will gradually divert capital from productive domestic uses, through a rise in interest rates. This diversion reduces the amount of capital available to U.S. workers, lowering their wages and hence their living standards. If our deficits are financed from abroad, interest rates may not rise as much, but interest payments on these deficits will flow back abroad.

In either case, the future national income of the United States and its citizens is reduced, businesses will find it harder to expand and homeowners will find it tougher to get credit.

Deficits can also affect the economy more suddenly. The prospect of large or out-of-control deficits can spark investors' fears and cause a run on the dollar and a sharp rise in interest rates.

Time to act, but it won't be easy

President Obama and Congress need to address these looming fiscal shortfalls. But it's not that simple. The economy's health must be their primary concern, particularly with most projections seemingly pointing toward a slow, muted recovery after the current recession ends.

And this continuing economic weakness creates a difficult balancing act. Fiscal stimulus can help the economy in the short run, but fiscal discipline is needed in the long run.

So when should policymakers make the switch?

Imposing fiscal discipline too late risks precipitating a crisis in financial markets. Imposing fiscal discipline too soon risks weakening the recovery or worsening the recession, as actually happened in the United States in the 1930s.

The Great Depression actually consisted of two severe downturns, the second starting in 1937 when the federal government imposed fiscal restraint.

Policymakers can thread this needle by committing now to future spending cuts and tax increases, while at the same time being careful not to undo the current stimulus or hurt economic prospects right now. Getting this mix right will require luck, discipline, imagination and leadership.

Alan J. Auerbach is a professor of economics and law and director of the Burch Center for Tax Policy and Public Finance at the University of California, Berkeley. William G. Gale is vice president of the Brookings Institution and co-director of the Urban Institute-Brookings Institution Tax Policy Center, a nonpartisan organization that aims to educate and inform tax and fiscal issues for policy makers and the public.

American Voters To Congress: Reduce The Deficit, Don’t Raise Taxes, And Don’t Cut Services

In the July 29, 2009 CBS News article "Poll: Americans Want Deficit Reduced," Brian Montopoli reports that U.S. citizens say they want the federal government budget deficits reduced, yet they are unwilling to make the necessary sacrifices or higher taxes or reduced government services:

A majority of Americans believe that the federal government should focus on reducing the budget deficit rather than spending to stimulate the economy, a new CBS News/New York Times poll finds.

Asked whether the government should focus on deficit reduction or stimulus spending, 58 percent of those surveyed cited deficit reduction. Thirty-five percent, meanwhile, said the government should spend more to stimulate the economy.

Republicans and independents were more likely than Democrats to favor deficit reduction. Seventy-nine percent of Republicans and 59 percent of independents preferred that the government focus on reducing the deficit, while nearly half of Democrats cited a preference for more stimulus spending.

While Americans overall favor deficit reduction, however, a majority are not willing to pay more in taxes or give up services in areas such as health care, education, and defense spending to do so.

Read The Complete Poll (pdf)

Only 31 percent said they supported a cut in services to lower the deficit, while 53 percent opposed it. And while 41 percent said they would be willing to pay higher taxes to reduce the deficit, 56 percent said they would not.

Blogger Doug Mataconis responded by saying:

This is exactly what’s wrong with American politics, and it’s exactly what got us into the mess that we’re in today.
Americans like to tell themselves that they believe in limited government and don’t like the massive deficits and national debt that we’ve run up over the past several decades. The dirty little secret, though, is that most of us are lying to ourselves. We like the government subsidies — and, yes, things like the home mortgage interest deduction and the charitable contribution tax deduction are subsidies — and we like the government programs. And, of course, we all hate paying higher taxes. So, when push comes to shove, nobody wants to do the hard things that will be necessary to return the nation to fiscal sanity.
As these poll internals reveal, it’s something that cuts across party lines:

Saying that you want to see the budget deficit reduced, but being against the only two methods of doing so is nothing more than phony political posturing. Which is apparently what America is reduced to these days.

Ronald Reagan´s Inaugural Address - 1981

In Ronald Reagan´s inaugural address on January 20, 1981, he claims:

For decades we have piled deficit upon deficit, mortgaging our future and our children's future for the temporary convenience of the present. To continue this long trend is to guarantee tremendous social, cultural, political, and economic upheavals.

Despite these warnings from the beloved Republican leader, the policies pursued in subsequent decades have dramatically increased budget deficits and the public debt.

Deficits & the Debt

Part 3: Deficits & the Debt

The following table contains estimates of U.S. government revenues and expenditures since 1948.

PRESIDENT
HOUSE
SENATE
Year
U.S. Government Revenues
(billions of dollars)
U.S. Government Expenses
(billions of dollars)
Budget Balance
(billions of dollars)
Federal Debt
(billions of dollars)
Truman (D)
Rep
Rep
1948
41.6
29.8
11.8
252.0
Truman (D)
Dem
Dem
1949
39.4
38.8
0.6
252.6
Truman (D)
Dem
Dem
1950
39.4
42.6
-3.1
256.9
Truman (D)
Dem
Dem
1951
51.6
45.5
6.1
255.3
Truman (D)
Dem
Dem
1952
66.2
67.7
-1.5
259.1
Eisenhower (R)
Rep
Rep
1953
69.6
76.1
-6.5
266.0
Eisenhower (R)
Rep
Rep
1954
69.7
70.9
-1.2
270.8
Eisenhower (R)
Dem
Dem
1955
65.5
68.4
-3.0
274.4
Eisenhower (R)
Dem
Dem
1956
74.6
70.6
3.9
272.7
Eisenhower (R)
Dem
Dem
1957
80.0
76.6
3.4
272.3
Eisenhower (R)
Dem
Dem
1958
79.6
82.4
-2.8
279.7
Eisenhower (R)
Dem
Dem
1959
79.2
92.1
-12.8
287.5
Eisenhower (R)
Dem
Dem
1960
92.5
92.2
0.3
290.5
Kennedy (D)
Dem
Dem
1961
94.4
97.7
-3.3
292.6
Kennedy (D)
Dem
Dem
1962
99.7
106.8
-7.1
302.9
Kennedy (D)
Dem
Dem
1963
106.6
111.3
-4.8
310.3
Johnson (D)
Dem
Dem
1964
112.6
118.5
-5.9
316.1
Johnson (D)
Dem
Dem
1965
116.8
118.2
-1.4
322.3
Johnson (D)
Dem
Dem
1966
130.8
134.5
-3.7
328.5
Johnson (D)
Dem
Dem
1967
148.8
157.5
-8.6
340.4
Johnson (D)
Dem
Dem
1968
153.0
178.1
-25.2
368.7

PRESIDENT
HOUSE
SENATE
Year
U.S. Government Revenues
(billions of dollars)
U.S. Government Expenses
(billions of dollars)
Budget Balance
(billions of dollars)
Federal Debt
(billions of dollars)
Nixon (R)
Dem
Dem
1969
186.9
183.6
3.2
365.8
Nixon (R)
Dem
Dem
1970
192.8
195.6
-2.8
380.9
Nixon (R)
Dem
Dem
1971
187.1
210.2
-23.0
408.2
Nixon (R)
Dem
Dem
1972
207.3
230.7
-23.4
435.9
Nixon (R)
Dem
Dem
1973
230.8
245.7
-14.9
466.3
Nixon/Ford (R)
Dem
Dem
1974
263.2
269.4
-6.1
483.9
Ford (R)
Dem
Dem
1975
279.1
332.3
-53.2
541.9
Ford (R)
Dem
Dem
1976
298.1
371.8
-73.7
629.0
transition quarter
Dem
Dem

81.2
96.0
-14.7
643.6
Carter (D)
Dem
Dem
1977
355.6
409.2
-53.7
706.4
Carter (D)
Dem
Dem
1978
399.6
458.7
-59.2
776.6
Carter (D)
Dem
Dem
1979
463.3
504.0
-40.7
829.5
Carter (D)
Dem
Dem
1980
517.1
590.9
-73.8
909.0
Reagan (R)
Dem
Rep
1981
599.3
678.2
-79.0
994.8
Reagan (R)
Dem
Rep
1982
617.8
745.7
-128.0
1,137.3
Reagan (R)
Dem
Rep
1983
600.6
808.4
-207.8
1,371.7
Reagan (R)
Dem
Rep
1984
666.5
851.9
-185.4
1,564.6
Reagan (R)
Dem
Rep
1985
734.1
946.4
-212.3
1,817.4
Reagan (R)
Dem
Rep
1986
769.2
990.4
-221.2
2,120.5
Reagan (R)
Dem
Dem
1987
854.4
1,004.1
-149.7
2,346.0
Reagan (R)
Dem
Dem
1988
909.3
1,064.5
-155.2
2,601.1
Bush (R)
Dem
Dem
1989
991.2
1,143.6
-152.5
2,753.6
Bush (R)
Dem
Dem
1990
1,032.0
1,253.2
-221.2
2,974.8
Bush (R)
Dem
Dem
1991
1,055.0
1,324.4
-269.3
3,244.1
Bush (R)
Dem
Dem
1992
1,091.3
1,381.7
-290.4
3,534.5
Clinton (D)
Dem
Dem
1993
1,154.4
1,409.5
-255.1
4,351.0
Clinton (D)
Dem
Dem
1994
1,258.6
1,461.9
-203.3
4,643.3
Clinton (D)
Rep
Rep
1995
1,351.8
1,515.8
-164.0
4,920.6
Clinton (D)
Rep
Rep
1996
1,453.1
1,560.5
-107.5
5,181.5
Clinton (D)
Rep
Rep
1997
1,579.3
1,601.3
-22.0
5,369.2
Clinton (D)
Rep
Rep
1998
1,721.8
1,652.6
69.2
5,478.2
Clinton (D)
Rep
Rep
1999
1,827.5
1,701.9
125.6
5,605.5
Clinton (D)
Rep
Rep
2000
2,025.2
1,788.8
236.4
5,628.7
Bush (R)
Rep
Dem
2001
1,991.2
1,863.9
127.3
5,769.9
Bush (R)
Rep
Dem
2002
1,853.2
2,011.0
-157.8
6,198.4
Bush (R)
Rep
Rep
2003
1,782.3
2,157.6
-375.3
6,573.7
Bush (R)
Rep
Rep
2004 estimates
1,798.1
2,318.8
-520.7
7,094.4
Bush (R)
Rep
Rep
2005 estimates
2,036.3
2,399.8
-363.6
7,458.0
Source - http://www.gpoaccess.gov/usbudget/fy05/sheets/b80.xls

The U.S. federal budget balance is the difference between U.S. government revenues and U.S. government expenditures.

U.S. federal budget balance =
U.S. government revenues – U.S. government expenditures

If the budget balance is positive, it is called a budget surplus. Thus, a budget surplus is an excess of government receipts over government spending.

If the budget balance is negative, it is called a budget deficit. Thus, a budget deficit is an excess of government spending over government receipts.

The public debt is the accumulation of deficits and surpluses over time. It includes all Federal debt held by individuals, corporations, state or local governments, foreign governments, and other entities outside of the United States Government less Federal Financing Bank securities. Types of securities held by the public include, but are not limited to, Treasury Bills, Treasury Notes, Treasury Bonds, United States Savings Bonds, State and Local Government Series, Foreign Series, and Domestic Series.

An estimate of the current value of the U.S. public debt is available from the U.S. Treasury.[7] As of November 24, 2004, the U.S. public debt was $7,517,849,423,608.38.

Having a large public debt increases the obligations of the federal government. The federal government must pay interest on the money it borrows. One way to reduce overall government expenditures would be to pay down the public debt.