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Donald Trump built a national debt so big (even before the pandemic) that it’ll weigh down the US economy for years [published 2021]
Link information
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- Authors
- Allan Sloan, Cezary Podkul
- Word count
- 2379 words
Here is an up to date chart.
It looks pretty bipartisan - there were similar increases in the Obama and Biden administrations too. There was a major increase in government debt during the pandemic, but that was the right thing to do in an emergency.
The problem with Trump is that a big part of his increase came from the 2017 tax cuts that were gratuitously passed in the midst of an economic boom, which is exactly when you're supposed to raise taxes in order to pay down the debt and build a financial reserve for the next downturn.
It's hard to make conclusions using that graph because you have to look for changes in slope. So I think it's easier to look at the deficit instead. This chart is adjusted for GDP to help account for changes in the size of the economy, which makes it easier to look at, but the trends are the same either way.
The deficit got worse every year under Trump, better almost every year under Obama, worse under GWB, better under Clinton (a surplus, even), worse under Bush Sr, nearly flat under Reagan (slightly negative), and nearly flat under Carter (slightly positive). This trend actually holds up all the way back to LBJ (Kennedy is the most recent Democrat to increase the deficit/GDP ratio during his tenure). Technically the deficit has improved a lot under Biden, but I can't really give him credit because of the huge deficit during 2020 and 2021 due to the pandemic.
So while the conventional wisdom is that the president technically has limited power to affect the economy, it is true that for the past several presidents the deficit has gotten worse under Republicans and better under Democrats. Trump only had the pandemic for the last year he was in office, so I think he can take some credit for worsening the deficit the first 3 years he was in office.
What a nothing article. The debt has been ramping up at insane levels ever since 9/11, no matter who has been president. I'm so sick of people trying to make up reasons to hate Trump when there are literally so many actual valid reasons to hate him.
9/11 is the wrong event, and it wasn't that bipartisan. Jun 7, 2001 is the date that the first W Bush tax cuts became law. Republican congress most of W's term which had even more tax cuts.
Obama gets elected. Democrats only had the house for 2 years in that 8, and the senate for 6ish, but republicans also would filibuster like hell, which meant needing 60% votes on a lot of stuff....which meant courting a lot of Republicans to get anything passed. The ACA got gutted real bad because of this.
Obama kept the Bush tax cuts in part because the economy was in the shitter when the tax cuts were up for renewal in 2010 and 2012. Funny how those are both big election years. Would have been political suicide to repeal them.
That's not to say the Democrats are indemnified....but they definitely had their hands a bit tied in terms of fixing the problem.
I've often seen this sort of partisan blame gaming around the national debt, and it's honestly very puzzling to me. Maybe it's just an information problem?
US tax receipts as a percent of GDP have been quite stable since the second world war: https://fred.stlouisfed.org/series/FYFRGDA188S
What's changed is government spending. And that's not the discretionary spending, where the vast majority of the partisan bickering happens. It's in the mandatory spending (Medicare, Medicaid, Social Security). Mandatory spending's share of the federal budget has gone from ~50% of the budget to ~70% over the last 50 years. And those huge mandatory spending increases are primarily just a natural product of the population pyramid changing. There's also the dramatic increase in medical costs, but if you look at those costs over the long term, that's mainly because people are living longer and there are more treatments available, so they're more expensive.
As far as getting this mandatory spending under control, anyone who's tried (a few politicians from both parties, perhaps most recently/famously, Paul Ryan) has discovered that this is a political third rail. It's just so publicly unpopular to discuss changes to the retirement age or medical cost sharing, that no one has ever been able to make any progress on it.
Also, debt is fairly inconsequential as far as I understand it. With modern monetary policy and currency sovereignty debt is just a made up construct and doesn't functionally serve a purpose. Debt is just a narrative tool used to push political agendas. Critiquing Trump on his expanding the debt is like so far down the list of legitimate complaints against the guy, it's laughable. Additionally, a Republican was in office... Of course the debt would rise.
I think it depends - MMP first of all Isa relatively new way of looking at things and while everything's fine so far, there's still room for long-term issues.
While I'm pretty sure that the federal reserve can keep creating money to offset the effects of debt, there's still the issue of servicing it which can cripple governments when the threshold gets nasty enough. This is especially a problem if there's a downturn.
You know what, I re-read your comment and I had to go back to the drawing board and refresh my memory. I think I am confusing debt and the deficit which are two different monetary mechanisms. I may be wrong about debt and confusing it with deficit. This 1dime video expands on to the myth of the deficit and I think I mistakenly confused that with debt.
I am going to poke around a bit more.
As much as I'd like to think that I know what's up on this front, I'm no economist and only have the second hand information that Podcasts give me.
That said, what I've gleaned it's that quantitative easing (the tool in MMP's toolbox) had worked until now, though it's largely untested long-term.
What does seem quite certain though is that constant growth is required for countries that over leverage themselves. - in thinking of Japan specifically where the debt to GDP ratio is 2:1. If they're not in a good enough position to pay interest on the national debt, bigger issues like a credit rating do, worse future lending terms and cuts to civic society are often in order.
Good luck! All of this makes me wish I had taken an undergrad in economics. Lol
It doesn't help either that to some (myself included) the national debt isn't even worth worrying about all that much — nations with currency sovereignty can just print money whenever they want to reduce debt, with (relatively) little effect on inflation, and this includes the Federal Reserve.
There are much, much better criticisms of Trump than this.