Every time over the past 62 years that we have had a balanced budget or run a surplus, we have had a recession shortly thereafter because both money and demand are being drained from the economy. John Maynard Keynes analyzed this situation and his conclusion was unequivocal: “a change-over from a policy of Government borrowing to the opposite policy of providing sinking funds (for paying off the principal of a debt) is capable of causing a severe contraction of effective demand.” The General Theory of Employment, Interest, and Money, p. 95.
Most recently, the budget was in surplus from FY1998-2001. In March, 2000, the stock market began a massive decline that bottomed in 2002 with a loss of $5 trillion of stock value, decimating millions of retirement accounts. The NASDAQ 100 crashed 78% and did not recover its losses for 15 years. GDP growth, which had been nearly 5% in both 1998 and 1999, collapsed to virtually zero in 2001.
More than 2 million jobs were lost in the recession that began in early 2001 and the unemployment rate, which began rising steeply in January, 2001, never returned to its pre-recession level. It peaked at 6.3% in June, 2003, and did not fall under 4.5% until October, 2006. https://fred.stlouisfed.org/series/UNRATE
FDR increased the debt 1000% to end the Great Depression and win WWII.
Reagan tripled the debt and ran record deficits for many years to end the bad recession of the early 1980s. His recovery produced GDP growth averaging 4.8% for 6 years (1983-88).
Obama added more than $9 Trillion to the debt and had the highest deficit-to-GDP ratios since WWII, but we have added 21 million new private sector jobs over the past 9 years ending the Great Recession. https://fred.stlouisfed.org/series/USPRIV
Did such profligacy result in increasing inflation? Hardly. Inflation today is lower than 50 years ago: 2.4% for 2018. OTOH, the worst sustained inflation we have had during the last century - the decade 1973-1982 - occurred when deficits were low - averaging 2.4% of GDP and the federal debt never exceeded 35% of GDP.
There was a budget surplus every year in the 1920s and four separate recessions during that decade with the last one ending in the Great Depression. In 1929, the debt-to-GDP ratio was only 16% due to those budget surpluses. In 1933, FDR began massive deficit spending which increased industrial production above its 1929 peak by December, 1936.
The economy kept on growing until FDR decided to balance the FY1938 budget which caused the "Roosevelt Recession" that began in September, 1937, and plunged the economy right back into the Great Depression. https://fred.stlouisfed.org/series/INDPRO FDR quickly reversed course and the economy began recovering in June 1938. The Depression was ended by FDR’s 1000% increase of the debt.
For the past 6 years, our debt-to-GDP ratio has been over 100% with no recessions, but with steadily rising employment, falling unemployment, rising wages and the lowest inflation of the past 50 years. We should have learned the lessons Keynes taught us 80 years ago, but we are not willing to learn and so budget deficits are a political obsession instead of fuel for economic growth which economists know they are.