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 , the deficits really began to balloon during the s and s.
Reagan's successor, George H. Under pressure from Republicans in Congress, President Bill Clinton agreed to consistently cut the deficit and eventually oversaw the first budget surplus in decades.
When he took office in , President George W. Bush cited the Clinton surplus as evidence that taxes were too high. 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. Another thing to know is that "discretionary" spending accounts for only about a third of the typical U.
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.
The U. 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 Relative to the size of the nation's economy, the biggest U. President Trump continued the trend of pushing the deficit higher as he sought massive tax cuts and increased defense spending.
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US Economy Fiscal Policy. Part of. Table of Contents Expand. Table of Contents. Drawback of Measuring Debt by President. Presidents With Largest Percentage Increase. Debt Increase by Fiscal Year. By Kimberly Amadeo. Learn about our editorial policies. Reviewed by Janet Berry-Johnson. Learn about our Financial Review Board. George W. The chief executive submits the budget, but fiscal policies are ultimately set by Congress through the budget process.
One of the specific points of conflict is the debt ceiling. The debt ceiling is part of a law Title 31 of the United States Code, section that sets a legislative limit on the amount of national debt that can be incurred by the U. This limits how much money the federal government may borrow. The debt ceiling does not limit government deficits. It can only stop the Treasury from paying for expenditures and other financial obligations after the limit has been reached.
This is where the conflict comes in. The process of setting the debt ceiling is separate from the United States budget process.
The raising of the debt ceiling is one of those unique beasts that neither directly increases nor decreases the budget deficit. But, it can have a big effect on the debt because it directly involves the Treasury borrowing money.
When the debt ceiling is reached, the President and Congress must reach an agreement on raising it. If an agreement is reached, the government moves forward with paying its obligations. If an agreement is not reached by the deadline, a government shut-down occurs until an agreement is reached. Abraham Lincoln is the President that added the biggest percentage increase to the U. National Debt. These debts were created in order to fund the American Civil War and laid the early seeds for how the future of the banking system would operate alongside federal taxes, which were introduced to help fund the war efforts.
President Roosevelt presided over the largest percentage increase in the national debt in modern history, but the third largest increase in Presidential history. The Great Depression levied a devastating hit to revenues, the New Deal cost billions of dollars, but what followed those two events was the second World War.
Woodrow Wilson was the fourth largest contributor to the debt in terms of percentage. However, a lesser-known milestone of the Wilson presidency, the Second Liberty Bond Act, gave Congress the right to adopt the national debt ceiling. President Reagan holds a solid fifth place with his percent increase in the national debt. Economists typically recommend that the federal government increase spending, and thus add more debt, during times of economic struggles and then pay down that debt when the economy recovers.
So while economic theory would support Obama's spending to help support the economy, Trump's recent debt binge has less support among economists. Looking ahead, recent legislative changes are expected to help Trump catch up to some of his predecessors in the debt-accumulation department. The combination of the new GOP tax law and the recent bipartisan spending deal are projected to increase the speed of debt accumulation over the rest of Trump's presidency.
A lot could change over that time period — adjustments to the tax code that increase revenue or spending cuts would alter the CBO's projections. But as it stands, Trump could add roughly the same amount of debt as Obama over two terms.
But while the raw debt figures are astonishing, putting the accumulation in percentage terms provides a somewhat different picture. Based on Treasury data and CBO projections:.
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