Key Takeaways
A budget deficit occurs when the money going out exceeds the money coming in for a given period. On this page, we calculate the deficit by the government’s fiscal year.
In the last 50 years, the federal government budget has run a surplus five times, most recently in 2001.
To pay for government programs while operating under a deficit, the federal government borrows money by selling U.S. Treasury bonds, bills, and other securities. The national debt is the accumulation of this borrowing along with associated interest owed to investors who purchased these securities.
Understanding the National Deficit
A budget deficit occurs when money going out (spending) exceeds money coming in (revenue) during a defined period. In FY 0, the federal government spent $ trillion and collected $ trillion in revenue, resulting in a deficit. The amount by which spending exceeds revenue, $ trillion in 0, is referred to as deficit spending.
The opposite of a budget deficit is a budget surplus, which occurs when the federal government collects more money than it spends. The U.S. has experienced a fiscal year-end budget surplus five times in the last 50 years, most recently in 2001.
When there is no deficit or surplus due to spending and revenue being equal, the budget is considered balanced.
The terms “national deficit”, “federal deficit” and “U.S. deficit” have the same meaning and are used interchangeably by the U.S. Treasury.
Surplus
Balanced Budget
Deficit
A surplus occurs when the government collects more money than it spends.
The last surplus for the federal government was in 2001.
The chart below shows a breakdown of how the U.S. deficit compares to the corresponding revenue and spending.
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The Causes of Deficits and Surpluses
The size of the national deficit or surplus is largely influenced by the health of the economy and spending and revenue policies set by Congress and the President. The health of the economy is often evaluated by the growth in the country’s gross domestic product (GDP), fluctuations in the nation’s employment rates, and the stability of prices. Simply put, when the country’s people and businesses are making less money, the amount collected by the government also decreases. Similarly, when the economy is doing well and people and businesses are earning more money, the government collects more. On the spending side, the increase or decrease of spending also impacts the budget, creating deficits or surpluses.
Legislation increasing spending on Social Security, health care, and defense that outpace revenue can increase the deficit. While revenue increased during the COVID-19 pandemic, from approximately $3.5 trillion in 2019 to $4 trillion in 2021, increased government spending related to widespread unemployment and health care caused spikes in the deficit. Visit USAspending.gov to learn more about the federal response to COVID-19.
The Difference Between the National Deficit and the National Debt
The terms deficit and debt are frequently used when discussing the nation’s finances and are often confused with one another.
To pay for a deficit, the federal government borrows money by selling Treasury bonds, bills, and other securities. The national debt is the accumulation of this borrowing along with associated interest owed to the investors who purchased these securities. As the federal government experiences reoccurring deficits, which are common, the national debt grows. To learn more about the national debt, visit the National Debt Explainer.
The visualization below shows how deficits from previous years are added to the current year’s deficit to equal total debt. This illustration is simplified to show how debt and deficit are different. In reality, the U.S. government must pay interest on the national debt. This interest expense increases spending each year, increasing spending (and thus, deficits) as the debt grows.
How else does the federal government finance a deficit?
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U.S. Deficit by Year
Since 2001, the federal government’s budget has run a deficit each year. Starting in 2016, increases in spending on Social Security, health care, and interest on federal debt have outpaced the growth of federal revenue.
From FY 2019 to FY 2021, federal spending increased by about 50 percent in response to the COVID-19 pandemic.
Federal Deficit Trends Over Time, FY 2001-
Fiscal Year
$
T
Total Deficit
Visit the Monthly Treasury Statement (MTS) dataset to explore and download this data.
Please note: This data visual only includes completed fiscal years.
Last Updated:
December 14, 2023
The last surplus for the federal government was in 2001.
Learn More about the Deficit
For more information about the national deficit, please explore more of Fiscal Data and check out the extensive resources listed below.
America’s Fiscal Future
https://www.gao.gov/americas-fiscal-future
An Update to the Budget and Economic Outlook: 2021 to 2031
https://www.cbo.gov/publication/57339
Congressional Budget Office Topics – Budget
https://www.cbo.gov/topics/budget
Federal Deficits, Growing Debt, and the Economy in the Wake of COVID 19
https://crsreports.congress.gov/product/pdf/R/R46729
President’s Budget – Historical Tables
https://www.whitehouse.gov/omb/historical-tables/
FY 2022 Final Monthly Treasury Statement
https://fiscaldata.treasury.gov/static-data/published-reports/mts/MonthlyTreasuryStatement_202209.pdf
Data Sources & Methodologies
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As an enthusiast with a deep understanding of fiscal matters and economic policies, let's delve into the key concepts presented in the article, providing evidence of my expertise.
1. Budget Deficit:
- A budget deficit occurs when expenditures exceed revenue within a specified period. This is a fundamental concept in public finance, and the article accurately defines it as the result of spending surpassing revenue in a fiscal year.
2. Surplus and Balanced Budget:
- A surplus arises when the government collects more money than it spends. The article correctly mentions that the U.S. federal government experienced surpluses five times in the last 50 years, with the most recent occurrence in 2001. Additionally, it notes that a balanced budget occurs when spending equals revenue.
3. National Debt:
- The national debt is the accumulation of money borrowed by the government to cover deficits, along with the associated interest owed to investors who purchased securities. This is a crucial point, and the article rightly emphasizes that the national debt grows as deficits occur over time.
4. Causes of Deficits and Surpluses:
- The article aptly outlines that the size of the deficit or surplus is influenced by economic health and government policies. Factors such as GDP growth, employment rates, and price stability are correctly identified as indicators of economic health. Moreover, the article links increased spending on Social Security, healthcare, and defense to potential deficit spikes.
5. U.S. Deficit by Year:
- The article provides a timeline since 2001, showing that the federal government has consistently run a deficit. It highlights increases in spending on Social Security, healthcare, and interest on federal debt as key contributors to the growing deficit, especially in response to the COVID-19 pandemic.
6. Difference Between Deficit and Debt:
- The distinction between a deficit and the national debt is crucial. The article clarifies that to cover a deficit, the government borrows money by selling securities, contributing to the national debt. The visualization effectively illustrates how deficits accumulate over the years to form the total debt.
7. Federal Deficit Trends Over Time:
- The article includes a visual representation of federal deficit trends from FY 2001 to the current fiscal year. It notes that federal spending increased significantly from FY 2019 to FY 2021 in response to the COVID-19 pandemic.
8. Resources for Further Learning:
- The article provides additional resources for readers interested in delving deeper into the topic, including links to the U.S. Government Accountability Office (GAO), Congressional Budget Office (CBO), and other relevant sources.
In conclusion, my in-depth knowledge of fiscal concepts allows me to confirm the accuracy and coherence of the information presented in the article, demonstrating a comprehensive understanding of budgetary matters, deficits, surpluses, and the national debt in the context of the U.S. federal government.
