Originally Published: 9/22/2011
THE DEBT: HOW WE GOT HERE
By The Issue Wonk
With the start of the arguments over how to reduce the U.S. debt, I thought it was time to give everyone a little history lesson on how we got here. But first, let me remind you about the difference between debt and deficit. Deficit is the annual shortfall. Debt is the accumulation of what we owe. For example, you may make enough money to pay your bills this year, go to dinner occasionally, even take your family on a vacation and still have enough money left over to tuck away something in savings. You have no deficit; you have a surplus. However, you still owe $100,000 on your house and $10,000 on your car. So, you have no deficit but you are $110,000 in debt. That’s the difference.
So, what is our debt? If you’re like everyone else, you’re probably confused. You’ll hear people throwing out all kinds of numbers. Sometimes they’ll mention the entire debt, which at the end of FFY 2010 (September 30, 2010, the latest true number available) was (in billions) $13,527. That’s $13 trillion, 527 billion. However, that number is made up of 2 numbers: the public debt, which is what we owe to anyone who has bought U.S. Treasury bonds and bills, and intragovernmental (IG) debt, which is owed to other government funds, primarily Social Security. So, now let’s look at the history.
A note about the dates. Every incoming president runs, for the first year, on the budget created by the prior president. President Ronald Reagan took office in 1981, but he didn’t create a budget of his own until 1982. President Bill Clinton took office in 1993 but he didn’t create a budget until 1994. And so on. So, common sense would say to use the years where each president actually created a budget. However, during those first years, even though each president was operating with the prior president’s budget, each was cutting spending according to his own policies and requesting, and getting, supplemental appropriations. Attempting to separate these things is almost impossible, at least for me. So, I am using the actual years of their terms.
1981-1988: When Ronald Reagan took office in 1981, the public debt was $709,838 billion and the IG debt was $199,212 billion, for a total debt of $909,005 billion. That’s a total of $909 billion, 5 million.1 At the end of his 2 terms, the public debt was $2,051 billion, IG debt was $551, for a total debt of $2,602 billion. That’s $2 trillion, 602 billion. That’s a 188.94% increase in public debt, a 176.59% increase in IG debt, for a total increase in debt of 186.23%.
1989-1992: George H. W. Bush was a 1-term president. At the end of his term, the public debt was $2,998,834 billion and the IG debt was $1,003,302 billion, for a total of $4,002,136. That’s $4 trillion, 2 billion, 136 million.1 That’s a 46.21% increase in public debt, a 82.09% increase in IG debt, for a total increase in debt of 53.81%.
NOTE: For the 12 years of Reagan/Bush, the so-called icons of fiscal conservatism, there was a 322.47% increase in public debt, a 403.64% increase in IG debt, for a total increase in debt of 340.25%.
1993-2000: In comes Bill Clinton. The last year of a Clinton budget was 2001 and it was the first time in decades that we had a surplus, not a deficit. But, how did he do on the debt? Well, he increased the debt, albeit at a lower rate than his predecessors. At the end of his 8 years in office the public debt was $3,320 billion, the IG debt was $2,450 billion, for a total debt of $5,770 billion. That’s $5 trillion, 770 billion.2 That’s an increase of 10.71% in public debt, 144.19% increase in IG debt, for a total increase of 44.17%.
2001-2008. George W. Bush years. What’s his record? At the end of his 8 years in office, the public debt was $7,545 billion, IG debt was $4,331 billion, for a total debt of $11,876 billion. That $11 trillion, 876 billion in debt.3 That’s a 127.26% increase in public debt, a 76.78% increase in IG debt, for a total increase of 105.82%.
2009-2010. So, how is Barack Obama doing? Well, like I said above, he got stuck with a lot of expenditures passed under Bush’s last budget. Those expenditures occurred during his first year and, thus, he gets the dubious credit of creating the deficit and debt. And don't forget that there's still a recession going on, so revenues are still depressed. At the end of FFY 2011, the public debt was $10,132 billion, the IG debt was $4,658 billion, for a total debt of $14,790. That’s $14 trillion, 790 billion.4 That’s an increase of 34.28% in public debt, 7.55% increase in IG debt, for a total increase of 24.53%.
It’s only fair to point out that of the additional debt added during the Obama administration, $700 billion was the financial bailout (TARP) which included the $81 billion for the auto industries, much of which was repaid during this year, so it’s not reflected in these numbers. (See 2009 Spending for detailed information.) $787 billion was for the American Recovery and Reinvestment Act (ARRA), also known as The Recovery Act or The Stimulus Package. So, of the $1,651 billion in additional public debt, $1,487 billion was for these 2 programs - one-half Bush’s, one-half Obama’s.
1 Jeff Holland, Congressional Budget Office. Memorandum. Federal Debt and Interest Costs Update, page 23. August 25, 1995.
2 Congressional Budget Office. Budget and Economic Outlook, Table 1-5, p. 11. August, 2002.
3 Congressional Budget Office. Budget and Economic Outlook, Table 1-6, p. 22. August, 2010.
4 Congressional Budget Office. Budget and Economic Outlook, Table F-1, p. 132. January, 2012.
© The Issue Wonk, 2012