There’s no hiding from the fact that the United States is mired in debt.
As of March 2018, the total outstanding debt was $20,958,230,936,189.63 and counting.
That’s over $20 trillion.
When you try to think about the size of that number, it’s terrifying.
It’s way more than the combined cost of the Louisiana Purchase, the Panama Canal, the Hoover Dam, World War II, the Korean War, the Vietnam War, and NASA’s entire space program since it started.
Over the decades, the country’s leadership has allowed this figure to balloon to this level, either by implementing ineffective means of combating debt, or by turning a blind eye towards the issue.
So which presidents are to blame?
Of course, each political party points to the other.
The fact is there’s no easy answer, because there are different ways to measure the situation.
The most popular method is to simply compare the debt level from when a president enters the White House to the debt level when he leaves.
Alternatively, we can examine the total US debt by president based on the fiscal year, the federal deficit by president, or debt as of percent of GDP.
Such complex analyses do not necessarily yield definitive answers, but we should factor them into our own political calculus.
When deciding whom to vote for as president, it’s smart to consider supporting a candidate who’s less likely to add to the debt.
After all, it’s your debt too: You’re paying for this debt when you pay taxes.
The American debt per citizen is over $60,000.
Americans are already swimming in credit card debt, student loan debt, and medical debt—what’s another 60K, right?
A lot, actually.
If the country continues to be burdened by debt, it risks defaulting on its obligations, which would diminish the United States’ power around the world.
It could also raise interest rates, reduce spending on government programs, and weaken entitlements like Social Security.
Since the US national debt now exceeds the gross domestic product (GDP), our economy seems to be headed off a cliff.
Yet Congress keeps raising the debt ceiling, allowing the federal government to borrow more and more.
As citizens, we need to get informed.
We’ve compiled the various criteria you can use to measure a president’s contribution to the debt and understand how policies influence our bottom line.
We have also looked closely at the numbers for the presidents who held office since 1981: Ronald Reagan, George H.W. Bush, Bill Clinton, George W. Bush, and Barack Obama.
To understand a president’s contribution to the national debt, we first need to learn how it’s measured.
Measuring Presidential Debt
Look at the president’s annual budget by fiscal year
The easiest way to measure how much a president contributed to the debt is to compare the debt when he entered office with the debt when he left.
The website TreasuryDirect.gov allows you to calculate this from 1993 to the present day.
Since daily debt numbers aren’t available before then, we haven’t used that measurement to compare the presidents since 1981.
For instance, on the day that Barack Obama was sworn in—January 20, 2009—the debt was $10.626 trillion.
When he left the White House, on January 20, 2017, it was $19.947 trillion.
The math is simple:
Obama added $9 trillion in debt.
By comparison, George W. Bush added $4.9 trillion and Bill Clinton added $1.5 trillion.
These figures make for appealing sound bites, often used on the campaign trail, but they can be quite misleading.
During the president’s first year in office, he doesn’t control the debt.
The budget for Obama’s first year was already set by George W. Bush.
From his inauguration through September 30, 2008, Obama was working under his predecessor’s budget.
Bush’s budget for the fiscal year 2009 created a $1.16 trillion deficit.
So, the arithmetic is not as reliable and conclusive as it seems.
Measure debt in relation to GDP
You can also measure the federal debt by president in relationship to the gross domestic product (GDP).
This is a classic way to gauge a country’s economic health: compare how much it owes to how much it takes in.
Most countries carry large sums of national debt, and it keeps rising.
A high debt-to-GDP ratio is considered bad and a low ratio is considered good.
Basically, the more money you have coming in—in relation to the size of your debt, the more likely you’ll be able to pay it off, and the less likely you are to default on obligations.
Debt and GDP go hand in hand—to make money, you have to spend money.
The world’s top economies are among its highest debtors, like the US, Japan, and Germany.
For most of US history, the ratio has been under 50%.
It indicates that the bare numerical debt doesn’t tell the whole story.
For instance, at the end of World War II, the national debt was $241.86 billion, about $2.9 trillion at today’s prices.
That’s less money than what the US owes today.
But in 1946, the debt-to-GDP ratio was at an all-time high of 113%.
Now it’s at 104%.
You can compare the yearly values of this ratio since 1966 on a handy graph by the Federal Reserve Bank of St. Louis.
As recently as 2009, the ratio was 84%, according to calculations by the St. Louis Fed.
That’s confusing because the economy seems much stronger now than it was during the Great Recession when the ratio was lower.
So, the debt-to-GDP measurement does not provide the perfect benchmark.
While it helps track the overall strength of the economy, it does not necessarily indicate the likelihood of paying back the national debt.
Remember that GDP is not the same as government revenue.
It measures the output of all American businesses—both public and private, and not how much goes back to Uncle Sam.
The national debt is not paid back with GDP but with taxes.
So even if the GDP goes up, if the collected taxes go down, it is still of no help to the government— even though it may sound good for individuals.
The debt-to-GDP ratio is made especially tricky by the fact that the United States can issue debt in its own currency, in the form of treasury notes and bonds.
Add up annual budget deficits to calculate his contribution to the debt
Another way to measure the debt by each president is to add up his annual budget deficits.
A deficit is when the government spends more money than it takes in.
Budget deficits represent a portion of the debt.
The annual deficit contributes to the total debt.
Every year, the president and Congress work out a budget.
They have no say on the nearly two-thirds of government dollars that go to mandatory spending on Social Security, Medicare, and Medicaid.
Only the remaining third of the budget is discretionary.
This is the portion that the president can influence through decisions regarding how much to spend on the military and other federal agencies.
Each budget takes into account projected tax revenue for the federal government.
Both tax cuts and government spending can create a deficit.
There are several problems with focusing on the national deficit by president.
For one, the president doesn’t have complete control over the budget. Though he makes proposals and signs it into law, the Constitution gives Congress control over spending.
The president is also stuck with policies created by previous administrations. For example, President Obama had less revenue as a result of President Bush’s tax cuts.
So it would be fairer to measure each president’s contribution to the deficit based on specific policy initiatives they have instigated.
There are some things that a president has no control over. President Bush faced the 9/11 terrorist attacks and Hurricane Katrina.
President Obama handled the Great Recession.
Their individual responses to catastrophic events cost public money.
A focus on the national deficit by year doesn’t give a complete picture. That’s because presidents can also borrow money from federal retirement funds.
The Social Security Trust Fund has had a surplus since 1987 because more people have put money in than taken it out.
The president can use these funds to reduce the budget deficit, but it still contributes to the debt.
Although President Bush had a budget deficit of $3.294 trillion, he added $5.849 trillion to the debt.
The difference is because he borrowed $2.5 trillion from Social Security funds.
National Debt by President
The United States has carried debt ever since George Washington was president.
Just as American citizens get in debt at a young age, so has the country taken on debt even since its youth.
You take on student debt to gain higher education to increase future income.
The United States took on debt to promote economic growth.
As we earn more money, we spend more money.
As the US economy grew, the government likewise had to support its growth by spending more money.
Only Presidents Andrew Jackson, Martin Van Buren, John Tyler, and Franklin Pierce left office with the debt at 1% or less of GDP.
Since the start of World War I, the debt has generally trended upward.
Debt doubled under Herbert Hoover and tripled as Franklin Delano Roosevelt ushered the country into World War II.
In percentage terms, Roosevelt increased the national debt more than any other president.
He added $236 billion, increasing the debt by over 1,000%.
Debt as a percentage of GDP fell after World War II and hovered around 30% in the late 1970’s and early 1980’s.
It started rising again under Ronald Reagan.
Tax cuts ballooned the debt
By every measure, debt increased substantially under Ronald Reagan.
His budgets increased the debt by $1.8 trillion (based on fiscal year).
September 30, 1981: $997.8 billion
September 30, 1989: $2.857 trillion
This includes the $1.4 trillion deficit.
The debt-to-GDP ratio also increased.
In the first quarter of 1981, debt was 30% of GDP.
When Reagan left office, it was 49% of GDP.
Several factors contributed to the rise in the national debt under Reagan.
Reagan dealt with a severe recession. Set off by high-interest rates, it lasted from July 1981 to November 1982.
The unemployment rate was above 6% for most of his term, peaking at 10% in late 1982.
Reagan’s tax cuts reduced government income. When Reagan took office, the top income tax rate was 70%.
He slashed it to 50% and then 28%.
Known as Reaganomics, these tax cuts tragically failed to stimulate enough economic growth to offset their huge cost to the nation’s coffers.
Meanwhile, government spending grew. Congress increased the defense budget and expanded Medicare.
As a result, the deficit spiked to levels previously seen only in wartime.
The US national debt has never really recovered since.
George H.W. Bush
Funded the Gulf War
Wars are always costly.
That’s how President George H.W. Bush racked up an impressive debt in just one term.
His budgets increased the debt by $1.58 trillion.
September 30, 1989: $2.857 trillion
September 30, 1992: $4.441 trillion
That includes $1.03 trillion in deficits.
The debt-to-GDP ratio rose from 49% to 62%.
Major events impacted Bush’s spending.
George H.W. Bush responded to Iraq’s invasion of Kuwait. This led to the Gulf War which led to a tremendous increase in America’s military spending.
The economy faltered. He spent $125 billion to bail out the economy after the 1989 savings and loan crisis.
Then in 1991, a recession impacted tax revenue.
Raised taxes and cut spending
Among our nation’s recent leaders, President Bill Clinton was the only one who did not run a deficit.
Thanks to new taxes and decreased military spending, he left office with a $36 billion surplus.
The overall debt still increased by $1.396 trillion, since Clinton tapped into the Social Security Trust fund.
September 30, 1993: $4.411 trillion
September 30, 2001: $5.807 trillion
Though the debt grew, it was a lower percentage of GDP, thanks to a booming economy.
The debt-to-GDP ratio decreased from 62% to 54%.
The rosy picture was due to good luck and Clinton’s policies.
The economy boomed. During the 1990s, the GDP grew to over $10 trillion annually.
Clinton raised taxes. In the 1990’s, the top marginal tax went up to 39.6%.
This move wasn’t a popular one with those affected by the rate hike, but it did the nation good by increasing revenue.
Budget controls restrained spending. In response to high deficits and rising debt, Congress and the president instituted and upheld strict fiscal policies that contributed to the surplus.
He decreased military spending. Following the end of the Cold War, Clinton reduced the number of troops and ships around the world.
George W. Bush
Cut taxes and responded to 9/11
President George W. Bush lowered taxes his first year in office, decreasing revenue just as the government ramped up military spending in response to the 9/11 terrorist attacks.
During Bush’s two terms, the public debt increased by $5.849 trillion.
September 30, 2001: $5.807 trillion
September 30, 2009: $11.909 trillion
The deficits totaled $3.293 trillion.
The debt-to-GDP ratio soared as well during the same period of time.
In 2001, the public debt was 54% of GDP; in 2009, it was already up to 77%.
The 9/11 terrorist attacks, two wars, a recession, and tax cuts all added up to a pretty hefty debt.
The dot-com bubble burst. From March to November 2001, the economy sank into recession.
Bush cut taxes in 2001 and 2003. He lowered the top tax rate to 35%, decreasing government revenue.
The War on Terror increased defense budgets. After September 11, military spending surged to more than $600 billion a year, with most of it used to fund the wars in Afghanistan and Iraq.
Bush also passed Medicare Part D to cover the cost of prescription drugs. This large entitlement expansion added billions to the debt.
In the long run, however, some analysts say that it has helped lower the price of prescription drugs and slowed down the cost of Medicare.
He approved the bailout in response to the 2008 financial crisis. The Troubled Asset Relief Program (TARP) added $700 billion to his last budget.
Barack Obama oversaw an increase in debt during the Great Recession
By any measure, Barack Obama added more to the public debt than any recent president.
The level of debt when the younger Bush left office was already grave.
Obama added another $8.335 trillion.
September 30, 2009: $11.909 trillion
September 30, 2017: $20.244 trillion
Deficits totaled $6.785 trillion.
The debt-to-GDP ratio also grew enormously, from 77% to 105%.
However, to be fair, it’s important to note that these staggering figures were largely the result of policies and events out of Obama’s control.
Obama dealt with the Great Recession. When he entered office, the stock market had cratered and businesses were shedding jobs.
In response, he and Congress passed the American Recovery and Reinvestment Act, an economic stimulus package that cost $787 billion.
The stimulus extended unemployment benefits, cut taxes, and funded job-creating projects.
The debt-to-GDP ratio would have risen even without government spending because American productivity in general was way down.
He extended the Bush tax cuts. To stimulate the economy, Obama kept tax cuts in place through 2012. This added $858 billion to the debt.
Federal income declined. As a result of the Recession, Americans earned less money and paid less in taxes. Government revenue was down.
Defense spending rose. In another continuation of Bush’s policies, Obama had to fund two wars.
This cost around $800 billion a year.
Entitlement programs got more expensive. With an aging population, the cost of Medicare and Social Security also rose.
Obamacare is probably not to blame. The bipartisan Congressional Budget Office estimates that Obamacare (the Affordable Care Act) would reduce deficits by $154 billion over its first decade.
Most of the recent presidents made substantial contributions to the national debt
Finally deciding on who’s to blame for the $20 trillion debt depends on how you approach the issue.
You have to weigh tax cuts, government spending, acts of war, and economic cycles.
Whether or not you wish to assign blame for the state we’re in, it is valuable to examine how the government handles its money—our nation’s money.
We’re all in the red together.
On a side note, I personally hate it when an individual gets mired in debt to the point that they can’t properly live their lives to the fullest.
That’s why I made it my mission to help educate consumers on financial issues while providing them the tools and solutions they need to manage their financial lives for the better.
Now, based on the data we’ve laid out above, which president would you blame the most for the huge national debt?
And which one would you say did a decent job in the face of the circumstances his administration was in?
Do you have any personal insights you wish to share on the topic?
Let us know in the comments below!