The U.S. budget deficit by year is how much more the federal government spends than it receives in revenue annually. The Fiscal Year 2021 U.S. budget deficit was budgeted at $1.1 trillion.﻿﻿

The Congressional Budget Office predicted that the COVID-19 pandemic would raise the FY 2021 deficit to $2.1 trillion. The FY 2020 deficit will be $3.7 trillion.

The largest deficit, $1.5 trillion, occurred in FY 2010. Spending increased to combat the 2008 financial crisis. Tax receipts dropped due to the recession at the same time, decreasing revenue. While revenues are expected to be the highest in U.S. history in FY 2020, President Donald Trump and Congress ramped up deficit spending to pay for record-high levels of military spending.

Social Security, Medicare, and Medicaid are mandatory programs that are also expensive. Payroll tax revenues cover all of Social Security, part of Medicare, and none of Medicaid.

Key Takeaways Deficits add to the national debt, while surpluses reduce the debt.

When a country's debt-to-GDP ratio gets too big, it destabilizes the economy.

The annual debt is higher than the deficit because Congress borrows from retirement funds.

Looking at deficits by year shows how events influenced the United States' need to borrow money.

Deficit Trends

The deficit should be compared to the country's ability to pay it back, and that ability is measured by gross domestic product.

Each year's deficit adds to the national debt. As debt increases, it can negatively impact the economy if it gets too large. The level of debt is compared to the gross domestic product to determine whether there is too much debt for the economy to handle.

The comparison is called the debt-to-GDP ratio (debt divided by GDP). The country reaches a tipping point if the ratio is more than 77%.﻿﻿ That's when lenders begin to worry whether it's safe to buy the country's bonds. They think the government may not be able to pay back its debt.

Congressional Spending and Debt

There's an important difference between the deficit and the debt, even though the terminology sounds similar.

The deficit has been less than the increase in the debt because Congress began borrowing from the Social Security Trust Fund surplus in 1987. The surplus was created by the baby boomer generation. They contributed more because there were more working people than retirees during their peak working years.﻿﻿

Their payroll tax contributions were greater than Social Security spending. That allowed the fund to invest the extra revenue in special Treasury bonds. Congress spent some of the surplus so that it wouldn't have to issue as many new Treasury notes.

Deficit by Year Since 1929

The deficit since 1929 is compared to the increase in the debt, nominal GDP, and national events in the table below. The debt and GDP are given as of the end of the third quarter, specifically Sept. of 30 each year. This date coincides with the budget deficit's fiscal year (GDP in the years up to 1947 is not available for the third quarter, so year-end figures are used).

The first column represents the fiscal year, followed by the deficit that year in billions. The next column is how much the debt increased by for that fiscal year. The third column calculates the deficit/GDP. The fourth column describes the events that affected the deficit and debt.