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    Federal spending has exceeded revenue since the 1970s, resulting in annual budget deficits equivalent to several percentage points of GDP. This has caused the federal debt held by the public to grow from less than 40% of GDP in the 1970s to over 60% of GDP by 2008. For most of the 20th century prior to the 1970s, spending and revenue were roughly in balance except during World War 2.

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    Public Finance

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    Federal spending has exceeded revenue since the 1970s, resulting in annual budget deficits equivalent to several percentage points of GDP. This has caused the federal debt held by the public to grow from less than 40% of GDP in the 1970s to over 60% of GDP by 2008. For most of the 20th century prior to the 1970s, spending and revenue were roughly in balance except during World War 2.

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    Revenue and Spending (% of GDP)

    Uploaded by

    penelopegerhard
    Federal spending has exceeded revenue since the 1970s, resulting in annual budget deficits equivalent to several percentage points of GDP. This has caused the federal debt held by the public to grow from less than 40% of GDP in the 1970s to over 60% of GDP by 2008. For most of the 20th century prior to the 1970s, spending and revenue were roughly in balance except during World War 2.

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    of 1

    14 PA R T I INTRODUCTION AND BACKGROUND

    FIGURE 1-4
    Revenue and
    spending (a)
    (% of GDP)

    50%

    40

    Spending
    30

    20

    10
    Revenue

    1930 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
    Surplus/
    Deficit (b)
    (% of GDP)
    5% Surplus/Deficit

    10

    15

    20

    25

    30
    1930 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
    Debt
    (% of GDP) (c)
    120%

    100

    Debt
    80

    60

    40

    20

    1930 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

    Federal Revenues and Expenditures, Surplus or Deficit, and Debt, 19302008 For most of the
    twentieth century, except for the World War II period, federal government tax receipts have kept pace
    with expenditures. But expenditures have exceeded receipts by several percentage points of GDP on
    average since the 1970s. The resulting federal government debt is now at about 40% of GDP.
    Source: Office of Management and Budget (2008), Tables 1.2 and 7.1. (Debt figures for 19301939 come from the U.S. Department of the Treasurys Bureau of the
    Public Debt.)

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