<P> The Southern states extracted a major concession from Hamilton in the recalculation of their debt under the fiscal plan . For example, in the case of Virginia, a zero - sum arrangement was contrived, in which Virginia paid $3.4 million to the federal government, and received exactly that amount in federal compensation . The revision of Virginia's debt, coupled with Potomac residence issue, ultimately netted it over $13 million . Another result of federal assumption of state debts was to give the federal government much more power by placing the country's most serious financial obligation in the hands of the federal government rather than the state governments . The federal government was able to avoid competing in interest with the States . </P> <P> The debts of the federal government on January 1, 1791 amounted to $75,463,476.52, of which about $40 million was domestic debt, $12 million was foreign debt, and $18.3 million were state debts assumed by the federal government, of the $21.5 million that had been authorized . </P> <P> To reduce the debt, from 1796 to 1811 there were 14 budget surpluses and 2 deficits . There was a sharp increase in the debt as a result of the War of 1812 . In the 20 years following that war, there were 18 surpluses . The United States actually paid off its debt entirely in January 1835, only to begin accruing debt anew by 1836 (the debt on January 1, 1836 was $37,000). </P> <P> Another sharp increase in the debt occurred as a result of the Civil War . The debt was just $65 million in 1860, but passed $1 billion in 1863 and reached $2.7 billion by the end of the war . During the following 47 years, there were 36 surpluses and 11 deficits . During this period 55% of the national debt was paid off . </P>

When was the last time we had a budget surplus