Citizens for Tax Justice , 202-626-3780 June 11, 2003
Bush to Fund a Third of Non-Social Security Spending This Year with Borrowed Money

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Related CTJ Analyses
Most Taxpayers Get Little Help from Bush Tax Plan5/30/03
Effects of First Three Bush Tax Cuts6/4/03

The latest budget projections from the Congressional Budget Office indicate that one out of every three dollars the federal government spends this year outside of the self-funded Social Security system will be paid for by borrowing. This will be the highest share of deficit-financed spending since World War II.

According to the CBO figures, the on-budget deficit in fiscal 2003 is likely to exceed $570 billion, meaning that 32 percent of non-Social Security spending will be financed with borrowed money this year.

President Bush’s return to huge deficit spending represents a sharp break from the recent past. During President Clinton’s second term, the government actually ran on-budget surpluses and began paying down the national debt. The new level of deficit spending exceeds the previous records set during the Reagan and George Herbert Walker Bush administrations, when on-budget deficits averaged 25 percent and 28 percent of on-budget spending, respectively.

The previous one year record for deficit spending, at 31 percent of total non-Social Security outlays, was set under President Reagan in fiscal 1983.

Shares of Non-Social Security Federal Spending Paid for by Borrowing
Fiscal 1947 to 2003 (projected)
Truman none
Eisenhower 3%
Kennedy-Johnson 6%
Nixon-Ford 14%
Carter 13%
Reagan 25%
Bush I 28%
Clinton 6%
Bush II, fy 2002 23%
Bush II, fy 2003p 32%
Note: in Clinton’s first term, 15% of non-Social Security spending was financed by borrowing. In his second term, the government ran on-budget surpluses.

Prior to the Reagan administration, the level of deficit financed spending was much lower.

  • President Truman balanced his budgets, on average, from fiscal 1947 through 1953.
  • The Eisenhower administration financed only 3 percent of on-budget spending with borrowing.
  • The Kennedy-Johnson administrations financed only 6 percent of on-budget spending with debt, and left office with an essentially balanced budget in fiscal 1969.
  • Deficit-financed spending rose in the 1970s, to 14 percent under Nixon-Ford and 13 percent during the Carter administration, but that was still less than half the current level.

On-budget federal revenues this year are expected to fall to about 11½ percent of GDP, the lowest level since before World War II, and about a quarter below the 15.9 percent level in fiscal 2000. Tax cuts enacted over the past three years, costing $176 billion this fiscal year plus associated increases in interest payments on the national debt, have played a major role in this unprecedented drop in revenues.

Click here to see a chart showing trends in federal borrowing.
Shares of Non-Social Security Federal Spending Paid for by Borrowing
(fiscal years)
1947 none   1976 23%
1948 none 1977 15%
1949 none 1978 15%
1950 none 1979 10%
1951 none 1980 15%
1952 none 1981 14%
1953 none 1982 20%
1954 4% 1983 31%
1955 1% 1984 27%
1956 1% 1985 29%
1957 0% 1986 29%
1958 0% 1987 21%
1959 7% 1988 23%
1960 7% 1989 22%
1961 4% 1990 27%
1962 6% 1991 30%
1963 4% 1992 30%
1964 6% 1993 26%
1965 2% 1994 22%
1966 3% 1995 18%
1967 9% 1996 14%
1968 18% 1997 8%
1969 0% 1998 2%
1970 5% 1999 –0%
1971 15% 2000 –6%
1972 14% 2001 –2%
1973 8% 2002 23%
1974 4% 2003p 32%
1975 20%  
Notes: From fiscal 1947 to 1953 (under Harry Truman), the budget was balanced overall. The year-by-year fluctations between surpluses and deficits are smoothed in the table for clarity. Likewise, occasional surpluses in fiscal 1954-61 (under Dwight Eisenhower) are shown as reducing deficits in adjacent years for clarity. Effects of the 2001 Bush tax cut in fiscal 2001 were attributed to Bush in fiscal 2002 rather than to Clinton. Negative percentages under Clinton reflect on-budget surpluses and debt repayment.


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