US Inflation Adjusted Deficit History

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Greenspan thinks the deficit is a problem. Here are the numbers, draw your own conclusions.

Figure used for 2004 is $477 billion (adjusted to $410.8B 1996 dollars), which is Congress's estimate, and is roughly halfway between the $420 and $521 estimates, both from the White House.
Source: Washington Post

Figure used for 2003 is $375 billion (adjusted to $329B 1996 dollars).
Source: CNN

All other numbers, including inflation adjustment figures for 2003 and 2004 are from the 2004 US Budget Historical Tables.

Party afilliation data is from CongressOL.com.

Shadow areas are WWII, Korea, Vietnam. This is to allow comparison of the typical deficit figures during war. Picking a specific date range for Vietnam is hard, use your own judgement.

Note also that the dot-com bubble coincides with the late 90's surplus.

The bars at the bottom of the charts show the political parties. The top bar is the president, the middle bar is the house majority, the bottom bar is the senate majority. Orange is Republican, blue is Democrat.

Click on the graphs for a detailed view.
 
Here's my first shot at assessing the data. This shows the inflation adjusted deficit in constant 1996 dollars. It makes a strong image, but it may be misleading. The deficit is growing faster than inflation, because our GDP is increasing faster than inflation.
 
This is the second attempt. This shows the deficit as a percentage of GDP. Immediately something becomes very apparent: World War II is a massive outlier, and throws off the rest of the chart.
 
Here's the one I feel is most meaningful. This shows the GDP relative deficit over the past 50 years, which eliminates the WWII and recovery outliers. This is the same period used in the remaining charts.
 
This chart shows the GDP relative deficits over the past 50 years sorted from highest to lowest. This shows the ability of the Fed, under varying party compositions, to maintain a balanced budget.
 
This chart shows the GDP relative receipts (taxation and other income) over the past 50 years sorted from highest to lowest. This provides an estimate of taxation under varying party compositions.
 
This chart shows the GDP relative outlays (spending and other outlays) over the past 50 years sorted from highest to lowest. This provides an estimate of expenditure under varying party compositions.
 

Things to Ponder

Which party is the fiscally conservative party? (the sorted deficit chart may help with this)
Which party is more likely to increase taxes? (the sorted taxation chart may help with this)
Which party is more likely to increase spending? (the sorted spending chart may help with this)
How much do major wars affect the deficit? (the first two charts may help with this)
How much do minor wars affect the deficit? (the first two charts may help with this)

Copyright 2004 Robert Bushman
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This work is licensed under a Creative Commons License.
 

Last modified: Mon May 24 08:08:51 MST 2004