Saturday, September 8, 2012

Whose Debt Is It Anyway?

You hear an awful lot about how President Obama has added more debt to the United States than all the other presidents before him combined, a charge that can easily be disproved by a simple review of facts.  But the facts do reveal that since taking office the debt has gone up approximately $5 trillion.  It currently stands at just over $16 trillion and counting.

That’s an awful lot of debt and certainly it must be dealt with.  But the $64 thousand dollar question is just how much of it is Obama responsible for?  Perhaps that’s a poorly worded question.  Technically, since he’s the president, he’s responsible for all of it.  The correct way to phrase the question should be how much debt has President Obama added to the nation since he took the oath of office?

To answer that question fairly and accurately requires an understanding of the last ten years.  When George Bush left office in 2009, the national debt stood at just under $11 trillion.  The problem, however, was that while Bush may have been gone, most of what he had done as President was still in effect.  Both the Iraq and Afghanistan wars were still being fought, both rounds of tax cuts were still on the books and Medicare Part D was still unfunded.

While the actual price tag for fighting both wars has never been completely known it is estimated that they collectively cost just over $1 trillion over the last decade.  That’s about $100 billion per year.  It is estimated that the Bush tax cuts cost approximately $300 billion per year. And then there’s Medicare Part D, which most economists expect will add $1 trillion to the national debt over the next ten years.

So, out of the gate, the Obama Administration was saddled with $500 billion in annual debt it couldn’t extricate itself from.  The earliest Obama could’ve gotten rid of the Bush tax cuts was at the end of 2010, but Congressional Republicans ostensibly held the nation hostage and Obama caved in to their ransom demands.  While he ended the Iraq war last year, he has committed himself to remaining in Afghanistan through 2014.  And, let’s be honest, would any sane politician dare tell seniors that they’re about to lose a valuable benefit, even if it means being fiscally responsible?

Okay, so that’s $1.5 trillion committed.  What about the other $3.5 trillion?  Glad you asked.  There’s the stimulus, which was a one-time primer if you will.  That cost about $800 billion.  So we’re up to $2.3 trillion.  Say what you want about it, but without the stimulus, the recession would’ve been far worse.  Indeed it might well have turned into a depression – more on that later.

Then there was the auto bailout.  The latest reports indicate that the total cost of bailing out G.M. and Chrysler has risen to $25 billion, but again, like the stimulus, the consequences of not acting would’ve been devastating.  I will omit TARP, since that was enacted during the Bush Administration but, unlike the above, was spent before Obama took office.

But now we come to the random element behind the massive debt.  Since 2008, the year the recession hit, total revenue has dropped by just over $400 billion per year.  In 2008, total receipts reported were $2.7 trillion.  It fell to $2.1 trillion and $2.2 trillion in ’09 and 2010 respectively and rose slightly to $2.3 trillion in 2011.  In 2012, total receipts are expected to be $2.5 trillion.  [The 2012 budget actually runs from October, 2011 to September, 2012.]  Add it up and that comes to $1.1 trillion less revenue during the Obama years. [The 2009 budget belongs to Bush.] 

Consider also that had we gone into a depression receipts might well have dropped considerably further than they did and the debt would’ve ballooned even more than it has, a fact that Obama’s critics have never given any thought to.

So, let’s add it up.

$1.5 trillion directly tied to Bush
$825 billion in stimulus and bailout money
$1.1 trillion in lost revenue due to the recession

That comes to $3.425 trillion in actual debt brought about by circumstances beyond President Obama’s direct control, leaving him responsible for approximately $1.5 trillion in new debt since he took office.  That comes out to about $375 billion per year, not exactly stellar, but hardly the worst of all time, given the circumstances.

The fact is that, going all the way back to Ronald Reagan, Barack Obama has increased the debt the least.  The worst offender by far was Reagan, who tripled it in his eight years in office.  George W. Bush doubled it during his two terms.  And what’s worse, all of Bush’s debt is truly his since he inherited a $300 billion surplus when he took office and the nation was not at war.

Of course, none of this will make any difference to those who hate Obama and who have no use for actual facts, or, as Bill Clinton adroitly put it in Charlotte this past week, can’t do basic arithmetic. But it at least makes what for many consider to be a highly contentious issue a bit less murky and a whole lot more honest.


Links: http://en.wikipedia.org/wiki/United_States_federal_budget

http://en.wikipedia.org/wiki/History_of_the_United_States_public_debt

1 comment:

Peter Fegan said...

Hats off to a reader of the blog - and you thought I didn't have any - who correctly pointed out that the graph I inserted in the piece was incorrect. PolitiFact had concluded that the numbers for Bush and Obama were skewed due to a discrepancy involving dates.

"Whoever put the chart together used the date for Jan. 20, 2010 -- which is exactly one year to the day after Obama was sworn in -- rather than his actual inauguration date. We know this because Treasury says the debt for Jan. 20, 2010, was $12.327 trillion, which is the exact number cited on the supporting document that Pelosi’s office gave us.

"However this error happened, it effectively took one year of rapidly escalating debt out of Obama’s column and put it into Bush’s, significantly skewing the numbers."

For the record no data from the graph was used in the piece and I have since switched out the incorrect graph with the correct graph to reflect a far more accurate representation.