Thereupon, after the catastrophic and costly Gulf Coast hurricanes of the summer of 2005, December 2007 inaugurated the most severe and longest financial and economic crisis since the 1929-1939 Great Depression. The 1998 collapse of Long-Term Capital Management and the 2000 dot-com bubble paved the way to the 2001 recession. The 1980 savings and loan crisis fueled the decade-long deep recession, and its 1990 resurgence led in 1990-92 to another recession of the economy already weakened by the 1987 Black Monday stock crash. The 1973 OPEC oil price shock led to the 1975-1976 recession. The cycle of economic crises changed to high gear.The United States embarked in a sort of permanent war demanding a huge buildup of military expenditure : 1950 Korean war, 1964 Vietnam war, 1991 Gulf War, 1993 Bosnia war, 1999 Kosovo war, 2001 Afghanistan war, 2003 Iraq War, not to mention other military interventions in Cambodia, Grenada, Lebanon, Libya, Panama, Somalia and Yemen.By 2013, the breakdown of federal receipts was as follows: individual income taxes 47.4%, corporation income taxes 9.9%, payroll taxes 34.2%, excise taxes 3%, and other receipts 5.5%.Īs from 1950, federal budgets were plagued by a chronic deficit disorder, caused both by extraneous and by endogenous causes : These new sources of funding would fuel the budget growth as portrayed by the upward trend of the blue line in the chart. Furthermore in 1935, social insurance and retirement taxes, also known as payroll taxes, were introduced by means of the Social Security Act.

Income tax grew quickly in importance, amounting to 60% of federal receipts in 1930, and 79% in 1944. Accordingly, income tax both individual and corporate would be enacted in 1913. These sources would clearly not be enough to adequately fund the growing array of federal expenditures. Until 1913, federal receipts consisted mainly of customs taxes, subsidiarily of the sale of public lands during the 19th century, and of (indirect) excise taxes. Meanwhile, fundamental changes had taken place on the receipts side of the budget. and Vietnam 1964-73) or as a result of recessions (the 1973 OPEC oil price shock). Deficits became rampant since the early 1950s, although large deficits were incurred in time of major wars (Korea 1950-53. The Great Depression followed by World War II resulted in a long, unbroken string of deficits that were historically unprecedented in magnitude, attaining $216 billion for the period 1931-1946. Thereafter budgets showed surpluses during 11 consecutive years. World War I brought back large deficits, reaching $23.2 billion for the period 1917-1919. A period of more or less balanced budgets followed.

The 1861-1865 Civil war, the 1898 Spanish war, the 1899-1902 Philippine war, combined with the 1890 depression, account for the deficit of about $1 billion accumulated in the years 1850-1900. The 1950 milestone indicates the point where federal budget deficit ceased to be the result of a combination of circumstances such as war engagements or economic depressions, to become a structural phenomenon inherent to the federal budgeting behavior.Įarlier deficits were related to the rise of war expenses, or to receipt crunches caused by economic downturns or depression. However, from 1950 onwards, we count an overwhelming 61 (87%) deficit years, against only 9 (13%) surplus years. Looking at how deficits and surpluses are distributed along the time line, one finds that until 1949, the two are rather balanced: there are 18 (45%) surplus periods, and 22 (55%) deficit periods. They took both a steeper slope and split paths around 1950. In the chart, the red line clearly subdues the blue one.Ī closer view reveals that the two budget lines hovered very close to each other until well into the 20th century. Over the 119 years since 1901, including the government estimates extending through 2019, the federal budget is 89 times (75% of the time) on the red (deficit), and only 30 times (25%) on the black (surplus). The US federal government is haunted by an irresistible attraction to overspending.

US federal budget receipts and outlays : Actual and estimates 1789-2019 | Scenario 2025 |

Us budget spending 2016