Fiscal Data Explains the National Deficit (2023)

Key Takeaways

A budget deficit occurs when the money going out exceeds the money coming in for a given period. On this page, we calculate the deficit by the government’s fiscal year.

In the last 50 years, the federal government budget has run a surplus five times, most recently in 2001.

To pay for government programs while operating under a deficit, the federal government borrows money by selling U.S. Treasury bonds, bills, and other securities. The national debt is the accumulation of this borrowing along with associated interest owed to investors who purchased these securities.

Understanding the National Deficit

A budget deficit occurs when money going out (spending) exceeds money coming in (revenue) during a defined period. In FY 0, the federal government spent $ trillion and collected $ trillion in revenue, resulting in a deficit. The amount by which spending exceeds revenue, $ trillion in 0, is referred to as deficit spending.

The opposite of a budget deficit is a budget surplus, which occurs when the federal government collects more money than it spends. The U.S. has experienced a fiscal year-end budget surplus five times in the last 50 years, most recently in 2001.

When there is no deficit or surplus due to spending and revenue being equal, the budget is considered balanced.

The terms “national deficit”, “federal deficit” and “U.S. deficit” have the same meaning and are used interchangeably by the U.S. Treasury.

  • Surplus

  • Balanced Budget

  • Deficit

Fiscal Data Explains the National Deficit (1)

A surplus occurs when the government collects more money than it spends.

The last surplus for the federal government was in 2001.

The chart below shows a breakdown of how the U.S. deficit compares to the corresponding revenue and spending.


The Causes of Deficits and Surpluses

The size of the national deficit or surplus is largely influenced by the health of the economy and spending and revenue policies set by Congress and the President. The health of the economy is often evaluated by the growth in the country’s gross domestic product (GDP), fluctuations in the nation’s employment rates, and the stability of prices. Simply put, when the country’s people and businesses are making less money, the amount collected by the government also decreases. Similarly, when the economy is doing well and people and businesses are earning more money, the government collects more. On the spending side, the increase or decrease of spending also impacts the budget, creating deficits or surpluses.

Legislation increasing spending on Social Security, health care, and defense that outpace revenue can increase the deficit. While revenue increased during the COVID-19 pandemic, from approximately $3.5 trillion in 2019 to $4 trillion in 2021, increased government spending related to widespread unemployment and health care caused spikes in the deficit. Visit to learn more about the federal response to COVID-19.

The Difference Between the National Deficit and the National Debt

The terms deficit and debt are frequently used when discussing the nation’s finances and are often confused with one another.

To pay for a deficit, the federal government borrows money by selling Treasury bonds, bills, and other securities. The national debt is the accumulation of this borrowing along with associated interest owed to the investors who purchased these securities. As the federal government experiences reoccurring deficits, which are common, the national debt grows. To learn more about the national debt, visit the National Debt Explainer.

The visualization below shows how deficits from previous years are added to the current year’s deficit to equal total debt. This illustration is simplified to show how debt and deficit are different. In reality, the U.S. government must pay interest on the national debt. This interest expense increases spending each year, increasing spending (and thus, deficits) as the debt grows.

Fiscal Data Explains the National Deficit (2)

How else does the federal government finance a deficit?

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U.S. Deficit by Year

Since 2001, the federal government’s budget has run a deficit each year. Starting in 2016, increases in spending on Social Security, health care, and interest on federal debt have outpaced the growth of federal revenue.

From FY 2019 to FY 2021, federal spending increased by about 50 percent in response to the COVID-19 pandemic.

Federal Deficit Trends Over Time, FY 2001-

Fiscal Year



Total Deficit

Visit the Monthly Treasury Statement (MTS) dataset to explore and download this data.

Please note: This data visual only includes completed fiscal years.

Last Updated:

February 18, 2023

The last surplus for the federal government was in 2001.

Learn More about the Deficit

For more information about the national deficit, please explore more of Fiscal Data and check out the extensive resources listed below.

An Update to the Budget and Economic Outlook: 2021 to 2031

Congressional Budget Office Topics – Budget

Federal Deficits, Growing Debt, and the Economy in the Wake of COVID 19

President’s Budget – Historical Tables

Data Sources & Methodologies

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What is the explanation of national debt? ›

The national debt is the amount of money the federal government has borrowed to cover the outstanding balance of expenses incurred over time. In a given fiscal year (FY), when spending (ex. money for roadways) exceeds revenue (ex. money from federal income tax), a budget deficit results.

Which fiscal policy would most likely result in the largest budget deficit? ›

Contractionary policy is characterized by decreased government spending or increased taxes to combat rising inflation. Expansionary policy leads to higher budget deficits, and contractionary policy reduces deficits.

What is the relation between fiscal deficit? ›

Definition: The difference between total revenue and total expenditure of the government is termed as fiscal deficit. It is an indication of the total borrowings needed by the government. While calculating the total revenue, borrowings are not included.

What is the national deficit quizlet? ›

budget deficit is the difference between what the federal government spends (called outlays) and what it takes in (called revenue or receipts) in one year. the total amount of money that a country's government has borrowed over time (combined over many years) currently the US National Debt is over $20 Trillion.

What is the main cause of national debt? ›

Factors that contribute to the U.S.'s high national debt include continued federal budget deficits, the government borrowing from the Social Security Trust Fund, the steady Treasury lending from other countries, low interest rates that promote increased investment, and raised debt ceilings.

Who does the US owe national debt to? ›

Many people believe that much of the U.S. national debt is owed to foreign countries like China and Japan, but the truth is that most of it is owed to Social Security and pension funds right here in the U.S.

What causes increase in fiscal deficit? ›

The regular spending of the government on subsidies and aiding the economically backward and the tax rampant is also a cause for the high fiscal deficits. The Central Government can keep the fiscal deficit in check by raising the taxes or decreasing the expenditures.

What is the root cause of fiscal deficit? ›

High-interest payments on past borrowings have greatly increased the fiscal deficit. To reduce the fiscal deficit, interest payments should be reduced through repayment of loans as really as possible.

How does fiscal policy affect the national debt? ›

The federal government adds to the national debt whenever it spends more than it receives in tax revenue. This causes a budget deficit, but it's necessary to help expand the economy. This is known as expansionary fiscal policy.

Is more fiscal deficit Good or bad? ›

By the definition, fiscal deficit may sound like an absolute negative indicator. However, moderate levels of fiscal deficit are considered a positive sign for the economy. They are seen as indicators that the government is spending on schemes and infrastructure projects that may boost growth in future.

What is the impact of fiscal deficit? ›

This reduces the availability of funds in the money market for private firms. A lower supply of money leads to a higher interest rate. This increased interest rate will discourage private firms from undertaking investment projects, thus "crowding-out" investment.

Why is fiscal deficit important? ›

Understanding Fiscal Deficits

If a government is spending more money than they are taking in through taxation or other means, it is important to ask why it is happening. Perhaps, the country is undergoing a recession, and the deficit is the result of economic stimulus put into place to help bolster the economy.

What is the best meaning of deficit? ›

A deficit is synonymous with a shortfall or loss and is the opposite of a surplus. A deficit can occur when a government, company, or person spends more than it receives in a given period, usually a year.

What is an example of a deficit? ›

A deficit is a situation in which liabilities are greater than assets. You are running a deficit if you spend more money than you make. None of the companies reported a deficit during this prosperous period.

What is budget deficit short answer? ›

What is the Difference Between the Federal Budget Deficit and the Federal Government Debt? A federal budget deficit occurs when government spending outpaces revenue or the income drawn from taxes, fees, and investments. Deficits add to the national debt or federal government debt.

What are three major drivers of the national debt? ›

The growth in our deficit is caused primarily by three key drivers of spending — demographics, healthcare costs, and interest on the debt — as well as by revenues that are insufficient to cover the promises that have been made.

Is national debt the same as deficit? ›

The deficit drives the amount of money the government must borrow in any single year, while the national debt is the cumulative amount of money the government has borrowed throughout our nation's history — the net amount of all government deficits and surpluses.

Is the US national debt a problem? ›

National Security Issues

The higher the national debt becomes, the more the U.S. is seen as a global credit risk. This could impact the U.S.'s ability to borrow money in times of increased global pressure and put us at risk for not being able to meet our obligations to our allies—especially in wartime.

Has the US ever paid off its debt? ›

By January of 1835, for the first and only time, all of the government's interest-bearing debt was paid off. Congress distributed the surplus to the states (many of which were heavily in debt). The Jackson administration ended with the country almost completely out of debt!

Who owes the US the most money? ›

Top Foreign Owners of US National Debt
  • Japan. $1,082.2. 14.88%
  • China. $870. 11.96%
  • United Kingdom. $645.8. 8.88%
  • Belgium. $332.9. 4.58%
  • Luxembourg. $312.9. 4.3%

What would happen if America paid off its debt? ›

The country's net economic power would increase as more money was spent on goods and non-financial services—production rather than monetary intermediaries. We would be back to being able to consume what our country's economic capacity could produce.

What are two causes of deficit? ›

What Causes a Trade Deficit?
  • Economic growth: A large trade deficit can actually indicate economic growth. ...
  • Increased government spending: An increase in government spending can mean a country's savings diminish, increasing the trade deficit.
Aug 31, 2022

How does fiscal deficit affect economic growth? ›

An increase in the fiscal deficit, in theory, can boost a sluggish economy by giving more money to people who can then buy and invest more. Long-term deficits, however, can be detrimental for economic growth and stability.

What are 3 problems that are caused by national debt? ›

High and rising deficits and debt can lead to persistently high inflation, rising interest rates, slower economic growth, increased interest payments, reduced fiscal space, greater geopolitical risk, and growing generational imbalances.

What happens when national debt is high? ›

Growing debt also has a direct effect on the economic opportunities available to every American. If high levels of debt crowd out private investments in capital goods, workers would have less to use in their jobs, which would translate to lower productivity and, therefore, lower wages.

Who owns most of the US debt? ›

Of the total 7.2 trillion held by foreign countries, Japan and Mainland China held the greatest portions, with China holding 870 billion U.S. dollars in U.S. securities. Other foreign holders included oil exporting countries and Caribbean banking centers.

What are the consequences of fiscal deficit? ›

A budget deficit can lead to higher levels of borrowing, higher interest payments, and low reinvestment, which will result in lower revenue during the following year.

Is the US deficit a problem? ›

National Security Issues

The higher the national debt becomes, the more the U.S. is seen as a global credit risk. This could impact the U.S.'s ability to borrow money in times of increased global pressure and put us at risk for not being able to meet our obligations to our allies—especially in wartime.

Why is the national debt a problem for the economy? ›

A nation saddled with debt will have less to invest in its own future. Rising debt means fewer economic opportunities for Americans. Rising debt reduces business investment and slows economic growth. It also increases expectations of higher rates of inflation and erosion of confidence in the U.S. dollar.

Is national debt good for the economy? ›

The national debt also impacts the economy because if it gets too high, consumer and business confidence in the economy may dwindle, which could lead to turmoil in the financial markets and higher interest rates.

Does national debt cause inflation? ›

If people come to believe that bonds held today will be paid off in the future by printing money rather than by running surpluses, then a large debt and looming future deficits would risk future inflation.

How can us reduce national debt? ›

Raising taxes and cutting spending are two of the most popular solutions for reducing debt, but politicians may be hesitant to do both. Diverting spending from the military to other sectors may boost job growth, which could spur consumer spending and help the economy.


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