Definition of Surplus

What is a surplus? What is the definition of a surplus as it applies to government spending? How rare is it for a government to post a surplus?

A government can do three things over the course of a fiscal year when it comes to their budget.

1. They can post a balanced budget.

2. They can post a deficit.

3. They can post a surplus.

By far, the most common of the three is #2. Most government post deficits, which is the reason why so many countries are up to their eyeballs in debt.

What is a surplus?

It's simple.

If revenues exceed expenditures, then the government has posted a surplus.

If a government brings in $2 trillion dollars in revenues but only spends $1.6 trillion over the course of a year, then they are said to have posted a surplus of $400 billion dollars.

The opposite of a surplus is a deficit.

In case you are curious, the last time that the United States posted a budget surplus was 2001. The amount? $127.3 billion dollars.


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