U.S. Presidents With the Largest Budget Deficits
S E E D E D C O N T E N T
Presidents inherit the previous administration's federal budget and budget deficit when they take office. Budgets and deficits stand for the first year because the federal fiscal year runs from Oct. 1 to Sept. 30. This makes it impossible for the incoming president to influence whether the budget has a deficit from January, when they take office, through the remainder of the fiscal year.
Almost every U.S. president in the last half-century has run a record budget deficit at one time or another, but the largest deficits in U.S. history were run by former President Donald Trump and his two immediate predecessors, Presidents Barack Obama and George W. Bush.
The deficit has gone down under the administration of Trump's successor, President Joe Biden, even though his administration had to deal with expenses connected to the COVID-19 pandemic.
Key Takeaways
- Donald Trump, Barack Obama, and George W. Bush had the biggest budget deficits in U.S. history.
- The deficit topped $1 trillion in 2020.
- The deficit declined to about $900 billion by 2022 under Joe Biden's administration.
- The U.S. government has run a budget deficit for nearly all of the last 60 years.
- A president's influence over a budget deficit doesn't begin until after the federal fiscal year ends on Sept, 30 of their first year in office.
20th Century Deficits
The largest budget deficits during the first half of the 20th century were seen during the two world wars. The largest deficits in history relative to the size of the economy occurred during World War II. The United States has run a budget deficit nearly every year since 1961, but the deficits began to balloon during the 1970s and 1980s.
President Ronald Reagan vowed to limit the size of government when he took office in 1981 but the nation's deficit roughly doubled and topped $200 billion several times during his eight years in office. George H.W. Bush, Reagan's successor, also presided over a record-breaking deficit of $290 billion in 1992.
Achieving a Budget Surplus
President Bill Clinton agreed to consistently cut the deficit under pressure from Republicans in Congress. He eventually oversaw the first budget surplus in decades.
The surplus stood at $236 billion in 2000, Clinton's final year in office. The $128 billion surplus recorded in 2001 was the last time a surplus has been seen in this century.
Return to Record Deficits
President George W. Bush cited the Clinton surplus as evidence that taxes were too high when he took office in 2001. He pushed through significant tax cuts and oversaw an increase in spending. The combination again drove the U.S. budget into the red.
The deficit reached a record $458 billion in 2008, Bush's last year in office. It would triple the following year as the Bush and Obama administrations faced the Global Financial Crisis.
How the Budget Process Works
A president proposes an annual budget, but Congress must approve all spending so a president's power over the budget is never absolute. That power can be severely limited if the opposition party holds a majority in either the House of Representatives or the Senate, and particularly if they hold the majority in both.
"Discretionary" spending accounts for only about one third of the typical U.S. budget. The majority of the budget is "mandatory" spending that's dictated by law. The most significant sources of mandatory spending are Medicare and Social Security.
Another influencing factor is that the federal fiscal year runs from Oct. 1 to Sept. 30 so the budget that's in place was passed during their predecessor's term during a president's first year in office. But incoming administrations can request additional spending upon taking office.
The Deficit Tops $1 Trillion
The U.S. budget deficit exploded in fiscal year 2009, ultimately reaching $1.4 trillion under President George W. Bush. The incoming Obama administration struggled to contain the economic fallout from the financial crisis. Most of that deficit was created under Bush's watch, but Obama and the Democratic-controlled Congress added hundreds of billions of dollars to it in early 2009.
The deficit would remain above $1 trillion throughout the 2012 fiscal year, but it was slashed to as low as $440 billion in the later years of Obama's presidency.
The biggest U.S. deficits in history relative to the size of the nation's economy were seen during World War II.
Trump's Budget Deficit
President Trump continued the trend of pushing the deficit higher as he sought massive tax cuts and increased defense spending. His first budget for the 2018 fiscal year recorded a deficit of $779 billion.
The deficit reached $984 billion in 2019 under Trump and it hit more than $1 trillion in 2020 before Congress passed a $2 trillion stimulus package to fight the economic fallout from the coronavirus pandemic.
Biden's Budget Deficit
One of President Biden's campaign promises was to reduce the federal deficit. The Congressional Budget Office (CBO) estimated that the federal budget deficit was $475 billion in the first five months of fiscal year 2022, which represented an amount less than those for years 2021 and 2020.
"It is less than half the shortfall recorded for the same months of fiscal year 2021 ($1,047 billion) and three-quarters of the deficit recorded in 2020 ($624 billion), just before the start of the coronavirus pandemic," the CBO stated. "From October 2021 through February 2022, revenues were $371 billion (or 26 percent) higher and outlays were $201 billion (or 8 percent) lower than they were during the same period a year ago."
The CBO reported in November 2022 that the budget deficit for FY 2022 was nearly $1.4 trillion, down from nearly $2.8 trillion in 2021. "The marked decline in the deficit from the previous year reflected waning spending in response to the coronavirus pandemic and increased revenues driven by higher inflation and the continued recovery of economic activity," the CBO reported.
The deficit was still "$339 billion larger than the shortfall estimated in CBO's most recent baseline budgetary projections, which were issued in May 2022," according to the CBO.
The CBO attributed part of the rise in the estimated deficit to programs aimed at student debt forgiveness and the COVID-19 emergency deferment that was scheduled to end on Dec. 31, 2022. It was extended until the end of June 2023 when President Biden proposed that the U.S. Secretary of Education had authority under the Higher Education Relief Opportunities for Students Act of 2003 (HEROES Act) to cancel approximately $430 billion in student loan debt principal.
This would have eliminated the debts of approximately 20 million borrowers, but the Supreme Court ruled otherwise on June 30, 2023, in a decision intended to control and reduce the deficit. President Biden subsequently announced the Saving on a Valuable Education (SAVE) plan. On Aug. 22, 2023, the Biden Administration launched SAVE, which is an income-driven assistance program. It aims at cutting undergraduate student loan payments in half to 5% of borrowers' discretionary income while other qualifying borrowers may see their payments brought down to $0 per month.
What Is a Budget Deficit?
A budget deficit occurs when expenses exceed revenue. It indicates the financial health of a country. The government, rather than businesses or individuals, generally uses the term budget deficit when referring to spending. Accrued deficits form national debt.
What Is a Budget Surplus?
A budget surplus occurs when income exceeds expenditures. The term often refers to a government's financial state because individuals have "savings" rather than a budget surplus. A surplus is an indication that a government's finances are being effectively managed.
Which U.S. President Spent the Most?
Former presidents George Bush, Barack Obama, and Donald Trump ran the largest U.S. deficits in U.S. history.
How Much Was the Deficit Left by President Reagan?
The deficit was 5% of the economy and interest payments on the debt were $169 billion in 1989 when President Reagan left office after serving two terms.
The Bottom Line
Biden budget figures show the dynamism of budget figures responding to challenges from war to political programs, such as debt relief. Whether Biden and Congress can continue to shrink the deficit for FY 2023 remains to be seen.
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A BS “feel good” number cooked by the massive COVID job losses. Most jobs gained were jobs that already existed. Little strength in creating new jobs
Love this claim. Meanwhile virtually all sectors of the economy are looking employees. Help wanted signs everywhere, existing businesses are cutting back hours. Another cooked number since few of these were new jobs and many workers aren’t looking for work anymore.
Another post COVID “feel good” cooked number. New manufacturing created? Almost nonexistent.
Another post COVID “feel good” cooked number after 17 months of increasing inflation, reaching 40 year highs. No way to go but down at that point.
Another post COVID “feel good” cooked number after record high gas prices
Honestly, stop with the intellectually dishonest garbage comments
Joseph Biden will preside over the largest deficit in U.S. history in a non-pandemic year,
Way to be number 1, Joe!
Yay, Bidenomics!!
We have avoided a post-Covid recession under President Biden's leadership and the US is leading the rest of the world with its post-Covid economic recovery. Unemployment is practically non-existent, wages are growing, inflation is tamed, businesses are profiting, our stock account have recovered and the US economy is growing again!
This is, of course, bad news for the MAGA in the gop who hope and pray things go badly for Americans so they can blame Biden and reelect El Trumpo, the orangutan hued megalomaniacal monster, who is already facing 91 federal criminal felony indictments. Pray on MAGA hats!
Your idiotic memes aside, pray tell why you avoid answering why people can't pay their legal debts.
Joe is even #1 with this tyke!
I call it the "Krugman effect", very similar to the Dunning-Kruger effect....
So... What you're saying is he'll preside over the largest deficit in U.S. history except for the trump years.
Exactly, the CARES ACT with its $2T+ price tag was approved in the Senate 97-0 and in the House by a unanimous voice vote.
if my statement is unclear to you, tell me which part you don't get.
I don't need people to explain my posts.
Continue to shrink the deficit for FY23?
Last Jan, CBO predicted a FY24 Budget Deficit of $2T, of course, they predicted a FY 23 deficit of $1.4 and now we know it will be around $2T.
The denial at play here continues to amaze any with the intellect to recognize such obtuse behavior.
It must be a tough job cheerleading for a loser like Bidenomics.
What are the economic policies you champion?
I wonder why the author didn't make mention of the $2 trillion deficit we face this year?
Just kidding, it is rather obvious, isn't it?
Some idiot will be along any minute to say as a “percentage” Reagan or Bush was worse.