However, a president doesn’t control the first year’s deficit. The previous president’s federal budget is still in effect for most of that year. The federal government’s fiscal year runs from October 1 through September 30. As a result, a new president has no influence on the deficit for January through September of that first year in office. A better way to calculate the deficit is by looking at each president’s budget and then adding the deficits for those budgets.
4 Factors That Influence the Deficit
There are four factors that can influence each president’s deficit.
1. Mandatory Budget
The president has no control over the mandatory budget or its deficit. That includes Social Security and Medicare benefits. These are the two biggest expenses that any president has. The acts of Congress that created the programs determine how much must be spent. The president’s budget can only estimate what these programs will cost. Unless the president gets Congress to change them, they must live with that spending.
2. Spending Control
The Constitution gave Congress—not the president—the power to control spending. The president’s budget is just a starting point. Each house of Congress also prepares a discretionary spending budget. The two houses combine them into the final budget, which the president reviews and signs. If there’s a hitch in the budget process, Congress can keep federal agencies running at current budget levels with a continuing resolution, or else federal agencies will shut down . There have been four shutdowns that lasted more than one business day. The first two happened in the winter of 1995-1996, and the third was in 2013. The fourth shutdown started in December 2018 and continued into January 2019.
3. Inherited Policies
Presidents inherit their predecessors’ policies. For example, presidents will have lower revenue from predecessors’ tax cuts. They also must manage social programs initiated by prior acts of Congress.
4. Catastrophic Events
Some presidents have to confront catastrophic events. President Obama faced the 2008 financial crisis. President George W. Bush had to respond to the 9/11 terrorist attack and hurricanes Katrina and Rita. These responses came with economic price tags.
The 4 Presidents With the Worst Deficits So Far
The four presidents with the worst deficits have been Barack Obama, Donald Trump, George W. Bush, and Ronald Reagan.
Barack Obama
President Obama had the largest deficits. By the end of his final budget, FY 2017, his budget deficits totaled $6.781 trillion over his eight years in office. That’s a 58% increase from President George W. Bush’s last budget. Obama took office during the Great Recession. He immediately needed to spend billions to stop it. He convinced Congress to add $253 billion from the economic stimulus package to Bush’s FY 2009 budget. The American Recovery and Reinvestment Act added an additional $534 billion over the rest of Obama’s terms. In 2010, the Obama tax cut added $858 billion in deficits in its first two years. Federal income decreased due to lower tax receipts from the 2008 financial crisis. Social security and Medicare benefits were eating up more of the budget, and healthcare costs were rising as the American population aged. In 2010, Obama signed the Patient Protection and Affordable Care Act. It sought to reduce healthcare spending. The Congressional Budget Office (CBO) and the Joint Committee on Taxation estimated that the legislation would reduce federal deficits by $337 billion between 2017 and 2026.
Donald Trump
President Trump took office in 2017. By the end of his term four years later, he was estimated to hold $6.6 trillion in deficits, a 33% increase. The CBO predicted that the COVID-19 pandemic would increase the FY 2020 deficit by $2.2 trillion and the FY 2021 deficit by $600 billion. In March 2020, Trump declared a state of emergency as the pandemic broke out in the United States. Nonessential businesses closed, and Americans were urged to shelter in place. Congress passed the $2 trillion CARES Act, along with other stimulus measures. The combination of reduced tax receipts and increased stimulus spending created record deficit levels.
George W. Bush
President Bush took office in 2001. He racked up $3.293 trillion in deficits during his two terms, a 57% increase. Bush responded to the 9/11 attacks with the War on Terror, which raised military spending. The Bush tax cuts addressed the 2001 recession. Unfortunately, the cuts did not sunset when the recession was over, which depleted revenues during the 2008 recession. Bush attacked the financial crisis with the bank bailout. Congress added the bailout to the mandatory budget, where it became the Troubled Asset Relief Program (TARP).
Ronald Reagan
President Reagan took office in 1981. He added $1.412 trillion in deficits and almost doubled the debt during his eight years in office. He fought the 1982 recession by signing the Economic Recovery Tax Act of 1981. It reduced the highest marginal income tax rate from 70% to 50% and reduced the corporate income tax for small companies with taxable incomes of $50,000 or less. Reagan also increased government spending by 2.5% per year. That included a 35% increase in the defense budget and an expansion of Medicare.
What Budget Deficits Hide
All presidents can employ sleight of hand to reduce the appearance of the deficit. They can borrow from federal retirement funds in off-budget transactions. For example, the Social Security Trust Fund has run a surplus since 1987. There have been more working people contributing via payroll taxes than retired people withdrawing benefits. The fund invests its surplus in U.S. Treasury notes. The president can reduce the deficit by spending these funds instead of issuing new Treasurys. That makes the deficit by year less than what’s added to the debt by year. For example, $8.588 trillion was added to the national debt under President Obama. But his total budget deficits totaled $6.781 trillion. Similarly, President Bush’s stated budget deficits totaled $3.293 trillion. But Bush added $5.849 trillion to the debt. The presidents who had the highest deficits are still those who contributed the most to the debt.
List of Presidents’ Budget Deficits by Fiscal Year
Although most other presidents have run deficits, none has yet came close to the four detailed above. One partial explanation is that the U.S. economy, as measured by gross domestic product (GDP), was so much smaller for other presidents. For example, by the end of 1981, GDP was only $3.2 trillion, one-fifth of the roughly $16.3 trillion GDP by the end of 2012. Below are each president’s annual budget deficits since Woodrow Wilson.
President Donald Trump
Total Actual plus Budgeted = $6.612 trillion, a 33% increase
FY 2021: $966 billion budgeted + $600 billion from pandemic impact = $1.566 trillionFY 2020: $1.083 trillion budgeted + $2.2 trillion from pandemic = $3.283 trillionFY 2019: $984 billionFY 2018: $779 billion
President Barack Obama
Total = $6.781 trillion, a 58% increase
FY 2017: $665 billion. Although Trump requested additional spending, Congress did not approve it.FY 2016: $585 billionFY 2015: $442 billionFY 2014: $485 billionFY 2013: $680 billionFY 2012: $1.077 trillionFY 2011: $1.300 trillionFY 2010: $1.5 trillion. This is the sum of $1.294 trillion and $253 billion from the Obama Stimulus Act that was attached to the FY 2009 budget.
President George W. Bush
Total = $3.293 trillion, a 57% increase
FY 2009: $1.16 trillion. This amount is calculated from $1.413 trillion, minus $253 billion from Obama’s Stimulus Act.FY 2008: $459 billionFY 2007: $161 billionFY 2006: $248 billionFY 2005: $318 billionFY 2004: $413 billionFY 2003: $378 billionFY 2002: $158 billion
President Bill Clinton
Total = $63 billion surplus, a 1% decrease
FY 2001: $128 billion surplusFY 2000: $236 billion surplusFY 1999: $126 billion surplusFY 1998: $69 billion surplusFY 1997: $22 billionFY 1996: $107 billionFY 1995: $164 billionFY 1994: $203 billion
President George H.W. Bush
Total = $1.036 trillion, a 36% increase
FY 1993: $255 billionFY 1992: $290 billionFY 1991: $269 billionFY 1990: $221 billion
President Ronald Reagan
Total = $1.412 trillion, a 142% increase
FY 1989: $153 billionFY 1988: $155 billionFY 1987: $150 billionFY 1986: $221 billionFY 1985: $212 billionFY 1984: $185 billionFY 1983: $208 billionFY 1982: $128 billion
President Jimmy Carter
Total = $253 billion, a 36% increase
FY 1981: $79 billionFY 1980: $74 billionFY 1979: $41 billionFY 1978: $59 billion
President Gerald Ford
Total = $181 billion, a 38% increase
FY 1977: $54 billionFY 1976: $74 billionFY 1975: $53 billion
President Richard Nixon
Total = $70 billion, a 20% increase
FY 1974: $6 billionFY 1973: $15 billionFY 1972: $23 billionFY 1971: $23 billionFY 1970: $3 billion
President Lyndon B. Johnson
Total = $36 billion, an 11% increase
FY 1969: $3 billion surplusFY 1968: $25 billionFY 1967: $9 billionFY 1966: $4 billionFY 1965: $1 billion
President John F. Kennedy
Total = $18 billion, a 6% increase
FY 1964: $6 billionFY 1963: $5 billionFY 1962: $7 billion
President Dwight Eisenhower
Total = $15 billion, a 6% increase
FY 1961: $3 billionFY 1960: $0 billion with a slight surplusFY 1959: $13 billionFY 1958: $3 billionFY 1957: $3 billion surplusFY 1956: $4 billion surplusFY 1955: $3 billionFY 1954: $1 billion
President Harry Truman
Total = $5 billion, a 2% increase
FY 1953: $6 billionFY 1952: $2 billionFY 1951: $6 billion surplusFY 1950: $3 billionFY 1949: $1 billion surplusFY 1948: $12 billion surplusFY 1947: $4 billion surplusFY 1946: $16 billion
President Franklin D. Roosevelt
Total = $194 billion, a 186% increase
FY 1945: $48 billionFY 1944: $48 billionFY 1943: $55 billionFY 1942: $21 billionFY 1941: $5 billionFY 1940: $3 billionFY 1939: $3 billionFY 1938: $0 billion with a slight deficitFY 1937: $2 billionFY 1936: $4 billionFY 1935: $3 billionFY 1934: $4 billion
President Herbert Hoover
Total = $5 billion, a 30% increase
FY 1933: $3 billionFY 1932: $3 billionFY 1931: $0 billion (slight deficit)FY 1930: $1 billion surplus
President Calvin Coolidge
Total = $5 billion surplus, a 26% decrease
FY 1929: $1 billion surplusFY 1928: $1 billion surplusFY 1927: $1 billion surplusFY 1926: $1 billion surplusFY 1925: $1 billion surplusFY 1924: $1 billion surplus
President Warren G. Harding
Total = $1 billion surplus, a 6% decrease
FY 1923: $1 billion surplusFY 1922: $0 billion with a slight surplus
President Woodrow Wilson
Total = $22 billion, a 775% increase
FY 1921: $1 billion surplusFY 1920: $0 billion with a slight surplusFY 1919: $13 billionFY 1918: $9 billionFY 1917: $1 billionFY 1916: $0 billion with a slight surplusFY 1915: $0 billion with a slight surplusFY 1914: $0 billion
Previous Years
FY 1789 through FY 1913: $1 billion surplus
