A lot has been said regarding how large the Federal Debt is and how unsustainable it is. It is interesting to go back and look at the historical record. Data source is Historical Tables which are available on Office of Management and Budget (OMB) website. OMB is the president’s accounting organization. A wide range of information is available under Historical Records. This article focuses on Table 7.1 – Federal Debt at the end of the year 1940 to 2016. Click that entry and you get a download of an Excel spread sheet with a lot of information.
I do not do well in interpreting numerical tables. I like to plot them out to get a idea of what they are saying. We will only plot total debt in nominal terms and as a % of GDP. On the chart I confirm the recent years Federal Debt as reported by the Treasury.
Note that the years after 2010 are projections. The near term years in the future are pretty accurate. However the out years tend to change a lot simply because the budget gets modified . Note that the nominal debt has been growing every year dramatically since Reagan. Note that %GDP kind of gives a false impression of a reduction when in fact the Debt is climbing every year. It is useful to note that the rate of growth under Clinton is much lower. It dramatically increases under George Bush II . This is is because of prosecuting wars and tax cuts. Then, the Financial Crisis produces a more dramatic change projected to continue in the Obama years.
It is useful to look at the rate of change of the Debt curve. I approximate that by calculating the extra money we have to borrow each year. That is plotted in the next chart along with Nominal Debt available in the first chart.
The Deficit curve accentuates the borrowing activity by each president. Note that under Reagan and Bush I, the borrowing continues, It starts coming down in Bush I’s last year because he increased Taxes which cost him the election loss to Clinton.
Note that the Deficit continues to go down under Clinton because of increased taxes and a good economy despite the taxes. .
Then under George Bush II the deficit dramatically returns because of lower taxes and entering wars. It is interesting to note that the Republicans had control of the Senate from 2003 to 2007, under Bill Frist. They had control of the House from 1995 to 2007, under Gingrich and Hastert. So from 2003 to 2007 they had the House, Senate and the Presidency. 4 of the 8 years during the Bush II term. Some would argue that they had the Supreme Court also. The bottom line is that they had complete control of the budget and the debt still was out of control. Then the Financial Crisis hit in 2008, the result of deregulation in the Bush years.
So, when we hear the Republicans lament the Debt, we need to remember that a large part of it was due to Republican policies. If you insist on reducing taxes and conducting wars with borrowed money, you get the result we are currently experiencing.
I like to remind my sanctimonious Republican friends that the debt is mostly of their doing