When Did Federal Deficits Begin to Decline?

by HNN Staff

Ask almost anybody and they'll tell you the federal deficit began going down in the 1990s following the 1993 tax hike, the largest tax increase in history.
Tables put out by the government seem to bolster this impression. This is a chart published by the White House Office of Management and Budget on August 22, 2001. The table seems to show that the deficts increased in the early 1980s, then flattened a bit before peaking in 1992. In the 1990s, the chart shows, the deficits rapidly declined.

The chart accurately measures the deficit in absolute numbers (or as economists put it, in nominal dollars). But as economist Dean Baker recently pointed out, voters"would get a better picture of the relative importance of budget deficits over this period if they were measured as a share of GDP. This measure would give a substantially different picture."
While the chart shows the defict peaking in 1992 at just under $300 billion dollars,"measured as a share of GDP, the deficit peaked at 6.0 percent in 1983," Mr. Baker reported."By this measure," he concluded,"the deficit fell through most of the eighties, although it did rise back to 4.7 percent of GDP in 1992, as a result of the recession in 1990-91."

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Charley - 4/25/2003

The federal deficit does not include values for the obligations of social Security - or the more recent Medicare/Medicade obligations. The future, unfunded obligations are so huge as to dwarf any imaginary surplus generated by the stock market mirage.

Peter B. Levy - 4/24/2003

HNN makes an interesting but somewhat misleading point in its piece "When did deficits begin to decline?" An even more accurate meaurement than deficits as a percentage or share of GDP is the Gross Federal Debt as a percentage
of GDP. In 1980 the gross federal debt stood at 33.4% of GDP. By 1992 it was up to 65.7%. The Clinton Administration was not able to immediately turn this dangerous trend around, yet by 2000 the gross federal debt stood at apx. 57% of GDP, a considerable accomplishment. Recently revised projections by both the CBO and and OMB reveal that we are once again headed in the wrong direction. The business cycle alone does not account for these trends.

Frank Lee - 4/23/2003

Those Clinton years were also the Gingrich years. Deficits have have been fairly solidly bipartisan since Nixon. Brooks confuses deficit with debt, a common freshman economics error which mixes up stocks and flows. In this case, the conclusions are not affected by the analytical mix-up.

The red ink really started big time with Reagan though, so the Democrats have a bit of a point there. In Reagan's defense however, he was engaged in the Cold Wa,. against a real long term threat requiring massive military capabilities and thus spending a lot of money, not a Fox News Video Game war concerning weapons of mass distraction.

Rod king - 9/5/2001

Mr Brooks' data, while factually correct, is in fact misleading as the total share of debt held by the public (as opposed to Federal Total Debt i.e. including Social Security Bonds)has dropped markedly. See www.publicdebt.treas.gov data for a detailed analysis (within GAO data tables) R. King

Gerald W. Brooks - 8/31/2001

Clinton – years 1 trillion 250 billion plus
12/29/200011 $5,662,216,013,697.37 18.2% of GNP
09/29/2000 $5,674,178,209,886.86 decrease 3% over 8 yrs
09/30/1999 $5,656,270,901,615.43
09/30/1998 $5,526,193,008,897.62 380 billion increase spending
09/30/1997 $5,413,146,011,397.34
09/30/1996 $5,224,810,939,135.73
09/29/1995 $4,973,982,900,709.39
09/30/1994 $4,692,749,910,013.32
09/30/1993 $4,411,488,883,139.38

from US Budget files.
Clinton – years 1 trillion 250 billion plus - just shy of Reagan years - which Democrats speak so much about - but never give Clinton numbers