Panel (a) shows the U.S. federal budget deficit as a percentage of GDP from 1940 to 2014. The U.S. government ran huge deficits during World War II and has run smaller deficits ever since. Panel (b) shows the U.S. debt–GDP ratio. Comparing panels (a) and (b), you can see that in many years the debt–GDP ratio has declined in spite of government deficits. This seeming paradox reflects the fact that the debt–GDP ratio can fall, even when debt is rising, as long as GDP grows faster than debt.