Note that the deficit is distinct from the government's debt (often confusingly called the national debt or public debt), which results from an accumulated deficit across a number of years. Often, a certain part of spending is dedicated to paying of debt with certain maturity, which can be refinanced by issuing new bonds. That is, a fiscal deficit leads to an increase in an entity's debt to others.
Historically, the United States government has tended to spend more than it takes in, with national debt that was close to $1,000,000,000 at the beginning of the 20th century. The budget for most of the 20th century followed a pattern of deficits during wartime and economic crises, and surpluses during periods of peacetime economic expansion. This pattern broke from fiscal years1970 to 1997; although the country was nominally at peace during most of this time, the federal budget deficit accelerated, topping out (in absolute terms) at $290 billion for 1992. In 1998 - 2001, however, gross revenues exceeded expenditures. Subsequently the budget has returned to a deficit basis; the estimated U.S. deficit for fiscal year 2004 is $412.6 billion.
An issue about counting so_called "off_budget" items such as Social Security, which are presently running a large surplus, complicates discussion of budget deficits.
The size of a governmental budgetdeficit is often an important political issue as well as one of economic policy.
The budget for most of the 20th century followed a pattern of deficits during wartime and economic crises, and surpluses during periods of peacetime economic expansion.
Subsequently the budget has returned to a deficit basis; the estimated U.S. deficit for fiscal year 2005 was $319 billion.
Budget reforms passed in 1974 mandated congressional budget resolutions to serve as alternatives to the president's proposed budget, and budget impasses became common.
The 1985 Gramm-Rudman-Hollings Act tried to control America's escalating deficits by giving the U.S. comptroller general the right to order spending cuts if the president and Congress did not reduce the deficit, but the bill was ultimately declared unconstitutional.
A balanced budget was maintained through late 2001, but tax cuts, the cost of President Bush's "war on terrorism," increased defense and other spending, and the effects of an economic recession produced a deficit again beginning with the 2002 budget.
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