US debt for the first time passed $22 trillion this week.
President Barack Obama’s administration racked up nearly as much debt in eight years than in the entire 232-year history of the country before he took office. He entered with $10.6 trillion in total debt and left with the country owing $19.9 trillion. That’s an average tab of $1.16 trillion a year.
Under President Donald Trump, the debt also has climbed. The $2.06 trillion increase works out to about $991 billion a year, or slightly less than the pace Obama had set.
There are two more relevant metrics, though, when thinking about national debt.
One is the percentage of debt as compared to gross domestic product. That’s an important measure because it gauges both the ability of the government to pay its tab through growth, and because it helps measure bang for the buck in terms of how much growth the debt has helped generate.
The other relevant metric is debt held by the public, which parses out “intergovernmental holdings,” or money the government borrows to operate from its various trust funds like Social Security and Medicare.
Total debt compared to the economy remained pretty low for decades until it began to climb in the early 1980s while President Ronald Reagan fought the Cold War against the former Soviet Union.
Debt to GDP was about 30.6 percent when Reagan took office in 1981, then steadily climbed to a peak of 65.3 percent in mid-1995, according to data from the St. Louis Federal Reserve. Then-President Bill Clinton and the Republican-controlled Congress eventually carved out a short-lived government surplus, resulting in less of a need to borrow and the level to fall to 30.9 percent in the second quarter of 2001.
From there, borrowing to finance two wars along with two recessions sent debt to GDP to 77.3 percent by the time Obama took office. When Obama left, the level had risen to 103.6 percent.
Under Trump, there’s been only a small uptick in that regard, with the level standing now at 104.1 percent.
In debt-to-GDP terms, the public debt rose from 75 percent when Trump took office to 76.4 percent as of the third quarter of 2018. As a contrast, that level rose from 47.5 percent at the start of Obama’s term to 75 percent when he left.
The future, is what has many economists concerned.
The most recent projections from the nonpartisan Congressional Budget Office indicate that debt held by the public will rise to 93 percent of GDP in the next 10 years, or the highest since just after the end of World War II. From there, the level is expected to hit 150 percent by 2049, which is well above what economists consider a sustainable level.
CNBC, Jeff Cox, 2019-02-13, “That $22 trillion Debt Number is Huge, but there’s what is really means”