Federal Outlays vs Receipts
Every dollar of federal outlays has to be paid for — either with current tax receipts or by issuing new debt. The gap between outlays and receipts is the deficit.
- Federal Outlays
- Federal Receipts
The federal government rarely runs a surplus. Since 1970 it has done so in only four years (1998–2001). Every other year, outlays have exceeded receipts and Treasury borrowing has filled the gap.
The two lines tell different stories. Receipts move with the economy — recessions slash income and corporate tax revenue sharply; booms lift them. Outlays move partly with the economy (unemployment insurance, Medicaid rise in downturns) but mostly on policy schedule — Social Security and Medicare grow with beneficiary counts and inflation adjustments; defense and discretionary spending follow appropriations.
When receipts fall faster than outlays can be cut — or when Congress deliberately expands outlays during a crisis — the deficit widens sharply. The 2020 COVID deficit was the largest since World War II as a share of GDP. Receipts have since recovered; outlays have not meaningfully contracted.
Frequently asked questions
What is the difference between federal outlays and receipts?
Outlays are government spending; receipts are tax revenue. The gap between them is the deficit (or, in rare years, the surplus). Every dollar of outlays that isn't covered by current receipts has to be financed with new Treasury borrowing.
Why does the deficit widen during recessions?
Receipts move with the economy, so recessions slash income and corporate tax revenue sharply. Outlays move partly with the economy too — unemployment insurance and Medicaid rise in downturns — but mostly follow a policy schedule. When receipts fall faster than outlays can be cut, or Congress deliberately expands spending during a crisis, the deficit widens. The 2020 COVID deficit was the largest since World War II as a share of GDP.
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