This graph illustrates some of the different causes of the US budget deficit.
This shows how the deficit has been affected by certain issues.
- Cyclical spending and lost tax revenues due to recession.
- Expansionary fiscal policy (economic recovery measures)
- Financial intervention to bailout banks and financial institutes.
- Bush tax cuts
- Cost of wars (unexpected spending)
The particular graph doesn’t show other factors affecting the budget deficit, such as growth in health care spending, the cost of social security and factors related to an ageing population. But, it is interesting to see $0.9 trillion of the 2009 deficit (roughly 75%) was caused by cyclical factors.