U.S. Federal Deficits, Presidents, and Congress (Updated 09/2011)
I ran across a Web site maintained by the Department of the Treasury, listing the U.S. National Debt year by year since 1791. The numbers by themselves are too big to be meaningful, so I put them into a spreadsheet to see if I could extract any interesting trends. Here’s what I did:
Tabulated the national debt by year, back to 1911. (I originally went only back to my birth, in 1964, but then expanded the chart to 1911, stopping there because I ran out of CPI data.)
Subtracted each year’s debt from the next year’s, as a measure of one-year federal deficit (including interest paid).
In 1976, the reporting date shifted by 3 months, so that “year” was actually 15 months long; I multiplied the deficit in this year by 4/5 to give an annualized figure.
Adjusted this annualized deficit by the annual Consumer Price Index to give one-year federal deficits in constant (1983) dollars.
Annotated each year by the party of the President and the party controlling each house of Congress (see House history and Senate history). Since Congressional terms start in early January, Presidential terms in late January, and fiscal years in October (since 1977) or July (before then), many years show a transition from one party to another.
Also annotated each year with the top-bracket individual marginal Federal income tax rate for returns filed that year (i.e. on the previous year’s income), drawn from The Tax Foundation. This is an oversimplification, of course, since it doesn’t say where that top tax bracket starts: for example, in 1992 the top tax bracket was 31% on income above $86,500, and in 1993 it was 39.6% on income above $250,000, but somebody who earned $125,000 in each of those two years would have seen almost no change. More dramatically, in 1941 it was 81% on income above $5 million, and in 1942 it was 88% on income above $200,000; somebody earning $250,000 in both years would have seen a marginal tax rate rise not from 81% to 88% but rather from 71% to 88%.
Note that it’s hard to ascribe cause and effect here: for example, when a war starts, tax rates and deficits usually both go up, but it would be hard to claim that one is because of the other; in fact, both are because of the cost of the war.