The budget deficit is a relatively simple metric. You take all the revenue the federal government brings in, then subtract all the spending. What you’re left with is the budget surplus… or if we spent more than we brought in, the deficit. As you can see the federal government almost always spends more than it makes. The numbers on this chart are expressed as a percent of the country’s GDP (basically the size of the entire US economy) to more fairly compare deficits across the years.
Slick Willie stands alone only president in the last 40 years to oversee a budget that ran a surplus. (In fact, you have to go back to 1969 to see another budget surplus).
Some may be thinking that the Trump had a pandemic to deal with that was a large cause of big deficit, and it shouldn’t be counted against him. It’s certainly true that the unplanned stimulus packages contributed a large amount to his deficit. Although, I happen to think a President’s defining crisis and the impact of how he handled it shouldn’t be erased from the record when judging his efficacy. (Or else we would certainly have to also credit Obama for taking office in the middle of the bank meltdown and financial crisis, for example). But for the sake of context, if you eliminate 2020 from the record and use the planned budget from last year in its place, Trump would have run a 4.2% deficit for his first term. That would actually leave him in the same rank on this chart and tied with Reagan’s first term.
My takeaways? I can’t tell which party is the financially conservative one, and they certainly both break PFC rule #1!
As always, reminding you to build wealth by following the two PFC rules: 1.) Live below your means and 2.) Invest early and often.