FIGURE 30.1 The Annual Federal Budget Deficit (or Surplus), 1940–2009
During World War II, the federal government incurred an enormous budget deficit. But between 1946 and 1965, it ran either an annual budget surplus or incurred a relatively small debt. The annual deficits rose significantly during the Vietnam War and the stagflation of the 1970s, but they really exploded between 1982 and 1994, in the budgets devised by the Ronald Reagan and George H. W. Bush administrations, and again between 2002 and 2005, in those prepared by George W. Bush. The Republican presidents increased military spending while cutting taxes, an enjoy-it-now philosophy that transferred costs to future generations of Americans.