The US National Debt reached an all time high of about 31 Trillion this year.
There are many ways to look at it.
Unfortunately, many pundits on YouTube over way one side or the other.
Writing for The Money Balance, Kimberly Amadeo’s take is worth sharing.
Here is the post:-
The Money Balance :- National Debt Under Obama
The Money Balance :- National Debt Under Obama
Depending on who you ask, President Barack Obama added anywhere from $2.8 trillion to $9 trillion to the national debt. With such a big gap, you might be wondering who’s lying. None of them, because there are three ways to look at the debt added by any president.
The first and most common method is to subtract the debt level when Obama took office from the debt level when he left. The second and more accurate method is to add together Obama’s projected budget deficits. The third method is the fairest but also the most complicated. It adds just the deficits created by the president’s specific initiatives.
Let’s take a look at each method and see what they tell us about the deficits President Obama added to the nation’s debt.
Method 1: Debt Added Since Obama Took Office
The largest number comes from calculating how much the debt increased during Obama’s two terms. When Obama was sworn in on Jan. 20, 2009, the debt was $10.626 trillion. When he left office on Jan. 20, 2017, it was $19.937 trillion. It explains why some would say Obama added $9 trillion to the debt.
Method 2: Obama’s Budget Deficits
The second method is to add up all of the budget deficits incurred while Obama was in office. You shouldn’t hold any president accountable for the deficit incurred during the first year. Most of that deficit belongs to the previous president since he created the federal budget for that year.
President George W. Bush’s last budget—for Fiscal Year (FY) 2009—created a deficit of $1.4 trillion.2 That fiscal year began on Oct. 1, 2008, and continued until Sept. 30, 2009. Although most of that deficit occurred after Obama took office, it was a result of Bush’s budget. Similarly, the first deficit that occurred after President Donald Trump took office was due to Obama’s last budget.
Here are Obama’s deficits by year. They total $6.807 trillion.
- FY 2009:
- Congress added $253.1 billion from Obama’s Economic Stimulus Act to Bush’s last budget after Obama took office.
- This emergency funding was to stop the Great Recession. That $253 billion accrues to Obama, not Bush.
- Once the $253 billion is subtracted from the FY 2009 deficit, it means Bush’s true budget deficit was $1.16 trillion.
- FY 2010: Obama’s first budget created a deficit of just under $1.3 trillion.
- FY 2011: This budget deficit was $1.3 trillion.
- FY 2012: The deficit was $1.1 trillion.
- FY 2013: This was the first Obama budget where the deficit, $680 billion, was less than $1 trillion.
- FY 2014: The deficit was $483 billion.8 Tax revenue rose to $3.02 trillion.
- FY 2015: The deficit fell further to $439 billion.
- FY 2016: The deficit rose to $587 billion.
- FY 2017: The deficit was $665 billion.
- It was $162 billion more than the $503 billion deficit estimated in Obama’s budget request.
Like most presidents, Obama’s contribution to the debt was higher.
There’s a difference between the deficit and the debt.
Federal Retirement Funds
All presidents can reduce the appearance of the deficit by borrowing from federal retirement funds.
For example, the Social Security Trust Fund has run a surplus since 1987.
There have been more working people contributing to the fund via payroll taxes than retired people withdrawing benefits from it.
This fund invests its surplus in the U.S. Treasury notes.
The president can reduce the deficit by spending these funds instead of issuing new Treasuries.
Method 3: How Obama’s Policies Increased the Debt
The third method is to measure the debt incurred by Obama’s specific policies.
The Congressional Budget Office (CBO) has done that for many of them.
The American Recovery and Reinvestment Act (ARRA) contributed $830 billion between 2009 and 2019.
More than 90% of its budget impact occurred by the end of 2012.
It cut taxes, extended unemployment benefits, and funded job-creating public works projects.
Like the tax cuts, the ARRA stimulated the economy after the 2008 financial crisis.
Obama’s largest contribution to the debt was the Obama tax cuts, an extension of the Bush tax cuts.
They added $858 billion to the debt in 2011 and 2012.
Obama also increased military spending, with the highest level of spending occurring in 2011.
Here’s a breakdown:
- Department of Defense base budget: $528.3 billion
- Spending by defense-related agencies: $166.7 billion
- Homeland Security: $41.9 billion
- Veterans Affairs: $56.4 billion
- State: $50.1 billion
- FBI and Cybersecurity: $7.8 billion
- National Nuclear Security Administration: $10.5 billion
- Overseas Contingency Operations for DoD and defense-related agencies: $159.5 billion
Using this same methodology, Obama’s total defense spending was $6.3 trillion:
- 2010: $857.7 billion
- 2011: $854.5 billion
- 2012: $816.3 billion
- 2013: $746.1 billion
- 2014: $753.3 billion
- 2015: $735.4 billion
- 2016: $767.2 billion
- 2017: $773.5 billion
As a result, Obama’s policy of increased defense spending added $1.3 trillion to the debt over the baseline established by Bush.
The Patient Protection and Affordable Care Act added to the debt after 2014.
That’s when the health insurance exchanges opened, and coverage was extended to more low-income people.
Obamacare’s tax increases offset these costs by $143 billion between 2010 and 2019.
When all of this is added up, Obama and his policies increased the national debt by $2.8 trillion.
The Bottom Line
Depending on the method you use, Obama contributed between $2.8 trillion and $9 trillion to the overall U.S. national debt.
While that’s a large amount, it’s worth comparing to the national debt added by every other president.
That’s the best way to understand why the U.S. debt is so big.
How did we get here?
- Economic Crisis
- Obama’s Election chances were brightened by the 2008 Sub-Prime Mortgage crises
- The economic crises snowballed into the great recession
- Afghanistan War
- On 9-11-2001, Al-Qaeda led by Osama Bin Ladin launched an attack inside the homeland
- George Bush Jnr asked for Afghanistan to hand off Osama Bin Ladin
- When Afghanistan did not acquiescence soon enough, George Bush Jnr, launched an invasion against Afghanistan
- Iraq War
- George Bush, Jnr launched a war to oust Saddam Hussein
- As the Iraq War drew on, Obama asked for the Surge
- Health Insurance
- The United States federal government is the biggest buyer of health insurance
- This is brought about the various health insurance it purchases
- Medicaid ( Link )
- 72.5 million Americans participate
- Including children, pregnant women, parents, seniors, and individuals with disabilities.
- Medicaid is the single largest source of health coverage in the United States.
- Senior Citizens ( People who are 65 or older )
- Affordable Care Act ( ACT )
- To extend health care benefits to those who cannot purchase one on their own in the open market
- And, extend same care to those with existing conditions
- Hope that heathy people will be forced to buy and keep insurance and thus contribute to a larger pool
- In time some of the “forcefulness” has been challenged in federal courts and rolled-back
- Medicaid ( Link )
- Extended George Bush’s Junior tax cuts
- Raised taxes on corporations and high income wage earners
- Those taxes were rolled back by his successor
Somethings are difficult to share.
But then left unsaid, people will search far and wide for the actual numbers and hear pundits explain it.
May the Lord add a blessing to his word; and keep us in his unfailing truth.