Starting Point: Teaching and Learning Economics > Teaching Methods > Interactive Lecture Demonstrations > Examples > Which U.S. President generated the highest budget deficits?

Which U.S. President generated the highest budget deficits?

This material is replicated on a number of sites as part of the SERC Pedagogic Service Project

Summary

Students use data from the U.S. Congressional Budget Office (CBO) to rank the magnitudes of nominal budget deficits or surpluses generated between 1969 and 2008 and to identify the corresponding Presidential Administrations. The ranking is recalculated using budget deficits and surpluses measured as a percentage of GDP.

Learning Goals

Students will become familiar with CBO data sources and discover that it is incorrect to use nominal data to compare budget deficits and surpluses over time.

Context for Use

Principles of Macroeconomics course.

Description and Teaching Materials

CBO spreadsheet containing budget deficit and surplus data.
CBO Budget Deficit Spreadsheet (Excel 60kB Sep28 09)

Teaching Notes and Tips

This activity follows the steps of an Interactive Lecture Demonstration

1. Prediction

The instructor starts with a general discussion of budget deficits. During the discussion, students would be asked to identify the Presidents in office from 1969 to 2008. Students would also predict the administration in which the budget deficits were the highest. The instructor could mention (or solicit from students) the highly publicized fact that deficits during the recent Bush Administrations were the highest since World War II.

2. Experience

Students working individually or in groups would be given nominal CBO budget deficit and surplus data from the attached spreadsheet. Alternatively, students could be assigned the task of locating these data on the internet. Students would then rank order the 1969 – 2008 data from the highest deficit to the highest surplus and identify the administration at the top of the list.

Students would then be given, or asked to retrieve, the CBO data with budget deficits and surpluses measured as a percentage of GDP. Using this new set of data, students would again rank order from the highest deficit to the highest surplus and identify changes in the in the rankings.

3. Reflection

The instructor would then lead a discussion as to whether or not the nominal data would be the best way to compare budget deficits and surpluses over time. Leading questions could solicit facts about how both GDP and inflation varied considerably during this time period.

Assessment

Students should be able to explain which measure of budget deficits and surpluses is the most appropriate to use in comparisons across time.