Trillions With A "T"
The U.S. national debt is over 22 TRILLION dollars. That's trillions — with a "T". As in 22,000 billion dollars. It's terrifying.
It's way more than the combined cost of World War II, the Korean War, the Vietnam War, and NASA's entire space program since it started.
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.
After all, it's your debt, too. You're paying for this debt when you pay taxes.
We're All In Debt Together
We're constantly under assault by debt. We're crushed under the weight of credit card debt. We're up to our eyeballs in medical debt. We're choosing between paying rent and student loans because it's possible to be making minimum wage with an expensive college degree.
So what's another 67K, right? A lot, actually.
If our country doesn't correct its debt spiral, it risks defaulting on its obligations. That would diminish its 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 without paying it back. As citizens, we need to be better informed.
Does your personal debt feel as dire as our national debt? We can help.
Why We Wrote This
We wanted to understand how individual presidents have affected the nation's bottom line. We explored the presidents who've held office since 1981.
Measuring Presidential Debt
To understand a president's contribution to the national debt, we first need to learn how it's measured. The easiest way is to compare his first and last days on the job.
Daily debt numbers aren't available before 1993, 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 That Seems Simple
Obama added $9 trillion in debt during his term. George W. Bush added $4.9 trillion. Bill Clinton added $1.5 trillion.
Debt statistics like those are ready-made talking points for cable news shows and stump speeches. But they can also be misleading.
Why? Because during a president's first year in office, he doesn't control the debt. He inherits his predecessor's budget.
The budget for Obama's first year in office was set by George W. Bush and during the 2009 fiscal year, it created a $1.16 trillion deficit. Bush had left the White House but it was the next guy who picked up the tab.
Comparing the numbers is simple. Knowing who the numbers belong to, and more importantly who to blame, is the useful information.
Debt-to-GDP Ratio: A Very Helpful Number
GDP (Gross Domestic Product is the total output of all American businesses. It's basically how much money a country makes.
Comparing the national debt to its GDP under a given president is a classic way to gauge a country's economic health during that time.[Formula heading="Calculating Debt-to-GDP "] [FormulaItem]National Debt[/FormulaItem] [FormulaItem operator="/"]GDP[/FormulaItem] [FormulaItem operator="="]Debt-to-GDP Ratio* [/FormulaItem] [/Formula]
*The ratio is usually written as a percent
Money's never quite that simple though. Debt and GDP go hand in hand. "You have to spend money to make money."
The world's top economies are among its highest debtors. Japan, Germany and the U.S. all have plenty of debt. They also genrate lots of cash to go with it. A country with a high-powered economy can keep more debt than smaller countries while maintaining it's credit rating.
What's a normal Debt-to-GDP for the U.S.?
For most of US history, the Debt-to-GDP ratio has been under 50%. But that doesn't tell the whole story.
U.S. debt at the end of World War II totaled $241.86 billion ($2.9 trillion with inflation). That's far less debt than the 29 trillion the US has today.
Its debt-to-GDP ratio at that time however was also at an all-time high of 113%.
Confidence Isn't Always About The Numbers
Ask yourself this: Do you feel confident that the economy is healthier in 2019 than it was during the Great Depression of the 1930's?
You almost certainly do because the economy is healthier today. But when unemployment had reached 25% and middle class Americans were relying on soup kitchens to stay alive, the Debt-to-GDP ratio was 44%.
Today it's 104%.
The president of the United States makes tough financial decisions every day. Each move invites half the country to praise and the other to criticize.
If you want to feel confident about which side of the argument to join, you need context. Decisions aren't made in a vacuum and neither should your opinions.
Here's our break down the last 6 POTUS. Judge or forgive away.
- 1981: $0.997 trillion
- 1989: $2.857 trillion
- $1.4 trillion deficit
- Increased defense budget and expanded Medicare
- Highest deficits since wartime
- Reaganomics' failure to stimulate economy left goverment underfunded
- Slashed top income bracket rate from 70% – 28%
- Unemployment rate was 6% – 10%
- High interest rates triggerd down turn
- Increased debt by $1.8 trillion
- Increased from 30% to 49%
- 1989 – $2.857 trillion
- 1993 – $4.441 trillion
- $1.03 trillion in deficits
- Invaded Iraq
- Gulf War led to huge increase in military spending
- $125 billion for Savings and Loan Crisis
Natonal Debt Increase
- Defecits increased debt by $1.58 trillion
- Increased debt to $12.3 trillion
- Increased from 49% to 62%
Raised Taxes And Cut Spending
- Only president since 1980 to not have a deficit
- Decreased military spending following the Cold War
- New taxes fueled by the Dot Com Bubble increased revenue
- 1993 – $4.441 trillion
- 2001 – $5.807 trillion
- Instituted strict fiscal policies
- Reduced number of U.S. troops stationed around the world
The (Social Security) Surplus
- Left office with $36 billion surplus
- Critics feel surplus owed to Social Security tax on payrolls
GDP And Debt
- Increased debt from $4.4 trillion to $5.8 trillion
- Though the debt grew by 32%, it was a lower percentage of GDP
- The debt-to-GDP ratio decreased from 62% to 54%
A Booming Economy
- GDP skyrockets to over $10 trillion
- Top tax bracket rate increased to 39.6%
9/11 – New Levels of Goverment Spending
The 9/11 terrorist attacks dramatically reshaped the U.S. economy.
- Military spending surged to $600 billion/year
- Afghanistan and Iraq wars primary cost
- 2001 – $5.8 trillion
- 2009 – $11.9 trillion
- TARP adds $700 billion after housing crisis
- Deficits totaled $3.293 trillion
- Cut taxes in 2001 and 2003
- Top tax bracket rate lowered to 35%
- Decreased government revenue
- Dot-Com Bubble burst
- Subprime mortgage crisis
- Widespread foreclosures increases avg household debt
Natonal Debt Increase
- Public debt increased by $5.849 trillion
- Public debt increased from 54% of GDP to 77% of GDP%
- Billions added to debt by Medicare Part D prescription drug program
- Slowed cost of Medicare
- Debt-to-GDP rose from 55% to 64%
- 2009 – $11.9 trillion
- 2017 – $20.2 trillion
- Military spending increased to $800 billion per year to fund two inherited wars
- Deficits totaled $6.785 trillion
- Entitlement programs like Medicare and Social Security became more expensive with the againg population
- Obama extended the Bush tax cuts to stimulate the economy and extended them through 2012. This added $858 billion to the debt
- Americans' pay decreased during the recession causing tax revenue to fall
The Great Recession (2008)
- Upon taking office, the stock market had cratered and businesses were shedding jobs
- The American Recovery and Reinvestment Act was was passed as an economic stimulus package costing $787 billion
National Debt Increase
- Obama added $8.335 trillion to the public debt – more than any modern president
- In 2001, the public debt was 54% of GDP. By 2009, it had increased to 77%
- The Medicare Part D Bill was passed reduce the cost of prescription drugs. This added billions to the debt but slowed the cost of Medicare
- The debt-to-GDP ratio grew enormously from 77% to 105%
- The bipartisan Congressional Budget Office estimates that Obamacare (the Affordable Care Act) would reduce deficits by $154 billion over its first decade
Just like their government, many Americans are adding to their personal debt faster than they can pay it down. Household debt is at an all-time high. Does any of this look familiar to you?
- Living paycheck to paycheck (78% of us do)
- Unable to put money into savings
- Credit card debt keeps growing
- Medical bills past due
- Student loans
Your personal Debt-to-Income ratio
- Your The debt-to-GDP ratio is more than 100%
It's Not Too Late
Getting out of debt is important. Take the first step today.