Beginning in 1980, the Reagan and Bush administrations slowed domestic spending, raised military expenditures, and cut taxes, producing enormous budget deficits that approached 300 billion a year by 1992.

Between 1992 and 2000, the Clinton administration and Congress reached a series of budget compromises and increased some taxes while the economy went through a prolonged period of growth that enhanced government revenues. Annual deficits shrank as a result and, from 1998 through 2000, the federal treasury actually ran surpluses.

After 2000, the George W. Bush administration again slowed domestic spending and cut taxes. Then came the September 11, 2001 attacks, the Afghanistan and Iraq wars, and massive spending on homeland security. The result has been the largest annual budget deficits in history which by 2004 dwarfed even the Reagan-Bush era deficits.