Did President Obama Double Our National Debt?

Who is the bigger fool….President Obama for doubling our national debt?…or the individual who believes such a canard?  Like all political claims, the devil is in the details.

More has been added to our national debt under President Obama than all the other presidents combined.  Partially true.  However, of the $5.1 trillion added to the National Debt from 2009 to 2012, only $1.5 trillion is due legislation signed by President Obama.  Of that $1.5 trillion, only $500 billion in incremental spending carries past 2010. The rest of the debt, or $3.6 trillion, can be directly attributed to legislation passed under previous administrations.

On January 20, 2009 President Obama walked into the oval office and was handed a negative annual deficit of $1.3 trillion.  This was a stark contrast from his predecessor, who began his eight years in office with a $200 billion dollar surplus.  However, through healthcare entitlements, unfunded wars, wealth redistributing tax cuts, and TARP that surplus had turned into the largest fiscal deficit our country had ever experienced.  Obama was handed this budgetary disaster, coupled with a collapsed economy with the expectation of immediate change.  Little did he know three years later, he would be held responsible for the gap he inherited, and full blame for the skyrocketing debt.  Before we can understand what Obama was expected to fix, we need to first understand where our government spends money.

The federal budget is broken into five major categories; healthcare, defense, social security, interest, and everything else.  The first four categories equate to 80% of the total federal budget consistently over the past 20 years. The “everything else” category includes spending from education, governmental programs, appropriations, earmarks, federal departments, etc.   The “everything else” category dominates 90% of federal budget debates and discussions, and is leveraged in political perversions of reality.  Here is the last 20 years of governmental spending broken down by category:

President Obama signed two major pieces of legislation that grew short and long term spending.  In 2010 President Obama signed the American Recovery Act.  This legislation accounts for $800B of new debt through $224b in entitlement spending, $275b in grants, and $288b in tax cuts over 2009 – 2010.  You can see these amounts reflected in the 2009 and 2010 budget lines as the “everything else” category spikes and then declines the following years.

The second piece of legislation that President Obama signed into law was the Patient Protection and Affordable Care Act, also known as Obamacare.  In crafting the legislation, House Democrats worked closely with the Congressional Budget Office (CBO) to ensure the new legislation would remain deficit neutral.  The potential increase in spending was offset by penalties due to mandates and some additional taxes directed at the super wealthy like “cadillac” healthcare plans.  The CBO produced a report confirming President Obama’s claims.  The only credible report opposing the neutral claim came from the highly conservative Heritage Foundation, providing a high side of $75 billion annual increase around the legislation (roughly 8%).  Since Obamacare was created to be deficit neutral, repealing Obamacare has a negligible impact on our Nation’s budget.

The rest of the budget growth relies on legislated “stabilizers” that kick in based on marketplace conditions.  For example, spending on Social Security will continue to increase as more individuals reach the threshold, unless we restructure the program.  Defense will continue to increase unless we make changes to our policies.  Medicare costs will continue to skyrocket as more individuals reach the required age.  Welfare costs should hold flat unless unemployment grows, and interest expense will continue to rise as more debt is issued to pay for all of these programs.  This entire group has little to do with any of President Obama’s policies, and would be growing at the same rate regardless of who sat in the Oval Office.

One of the most overlooked causes of our budgetary problem is due to governmental income, or receipts.  Like our own household budget, when our income stays flat, so should our spending.  Over the last decade this has not been the case.  From 2000-2009, budgetary spending increased almost 96% and our nation’s receipts (income) only increased 3%.  Imagine doubling your household spending after receiving a 3% pay raise!  In 2000 receipts were roughly 20% of GDP.  In 2009 receipts were 15% of GDP.  If the 2009 receipts were equal to 2000 levels, our annual deficit would decline by $700 billion.

What caused this shortfall in income?  The collapse of the economy and the 2002/2003 tax cuts.  In 2002 and 2003, tax cuts were signed into legislation based on the premise that the red hot economy of the 1990’s would continue through the next decade.  The collapse of the housing market and war spending were not part of the equation, nor was TARP funding and other bailouts.  Even more problematic was when President Obama extended these tax cuts compromising with the Republicans to avoid a governmental shutdown.  Declining receipts due to the economic collapse is straight forward; less income tax is being collected due to unemployment and less is being spent by the consumer.

As we go into the 2012 elections voters beware.  You might be inclined to blame President Obama for the rising National Debt.  However, if Governor Romney takes office in 2012, he will have four years of continuing rising deficits unless the big four spending categories are re-legislated.  Why?  Because minimal has been proposed in controlling rising spending, and any additional tax cuts will only expedite the problem.  Of course the desire will again be to blame President Obama, but that will fall on deaf ears due to lack of rhetoric consistency.

If you still believe President Obama is to blame for $5 trillion in new debt, feel free to comment below identifying what legislation he signed to deliver such a disastrous fiscal decline.  Whatever your belief, cut through the media’s rhetoric and read the actual budget.  http://www.whitehouse.gov/omb

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Matthew

Author / Editor
I am passionate about politics. What I find the most interesting is the theater, strategy, and positioning. My writing revolves around political process and impacts of policy decisions. I completed my undergrad at Arizona State and MBA at University of St. Thomas in Minneapolis, MN. I have worked in the consumer products industry for the last 12 years for Gillette, P&G, and Henkel. I am a husband of twelve years and father to four daughters (11,9,5,4).

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15 Responses to Did President Obama Double Our National Debt?

  1. Anon says:

    You can’t blame everything on Obama, but isn’t he just another politician who makes promises he can’t keep? You said only 1.5 trillion of the 5.1 trillion is due to legislation signed by Pres. Obama. But maybe people wouldn’t be so hard on him if he didn’t say, “And that’s why today I’m pledging to cut the deficit we inherited in half by the end of my first term in office. This will not be easy. It will require us to make difficult decisions and face challenges we’ve long neglected. But I refuse to leave our children with a debt that they cannot repay — and that means taking responsibility right now, in this administration, for getting our spending under control.” — President Obama, February 23, 2009 http://www.whitehouse.gov/the-press-office/remarks-president-and-vice-president-opening-fiscal-responsibility-summit-2-23-09

    • Anon says:

      Sorry if this is off-topic, but I was responding to this line you wrote: “Little did he know three years later, he would be held responsible for the gap he inherited, and full blame for the skyrocketing debt.”

    • AlsoAnon says:

      The national debt is not the same thing as the deficit. The deficit HAS been reduced by 32% since January 2009 when measured according to the metric favored by economists: Percentage of GDP.

  2. Heather says:

    A really informative blog. Thanks for writing it! I get so tired of hearing the FoxNews soundbites about Obama and spending and debt. The last Prez who balanced a budget? A democrat! The last Prez who shrunk the government? A democrat! If only people could see/understand what is really going on!

  3. […] takes their first breath.  They hide behind a shield of fiscal conservatism but have no idea what is driving the federal budget.  They also live in utopian world of problem solving.  Yes I agree, cutting off welfare might […]

  4. […] are at record levels.  Now the only argument the right has is the skyrocketing national debt, but as I demonstrated here this has very little to do with President Obama’s […]

  5. Robert Casey says:

    Obama has allowed the debt and deficit to continue to grow. He promised to cut it. He claims he didn’t know how bad things were, when he ran his first campaign saying how bad things were. He was in the Senate and voted on budgets. He knows the situation. He just wants to increase taxes in order to “redistribute” wealth and increase social programs. If we got rid of the debt, we could spend that money doing a lot of good instead of paying the Chinese.

  6. jay F. says:

    And then there is the alternative narrative from the memes on the right wing: maybe the debt really doesn’t matter much — as a % of GDP it is higher than normal due to the worst recession since 1930 — but not catastrophic. The high interest rates — that the Ryans and the Fox news fear mongers – related to the debt have never materialized. In fact – the interest rate has halved on the debt. On the other hand what government needs to do is spend more – to create demand and get people back to work…then reduce debt in good times (exactly what Bush should have done — when he had the chance: he did the opposite). Medicare is a long term problem however as your graph indicates. You might also appreciate, reader and fan of your Mormon blog — that I am a non-believer. 🙂

  7. Calvin says:

    At what point do we stop blaming our predecessors and take responsibility? Any CEO that starts blaming the predecessor quickly looses credibility. Especially after four years. At what point do we expect results?

    The paragraph on Obamacare needs to be updated. That legislation is definitely not budget neutral. Add to it costing way more than what we were told it would cost from the government side, we as premium payers are going to take an additional 20% hike.

  8. Unfortunately Calvin, the government is not run like a business. The President does not have absolute power like a CEO has, so its a tricky comparison. The US government has five hundred plus voting members and each has significant power (especially senators). We are paying for the choices of several generations of government and Presidents are not dictators so changing mandatory spending is impossible without cooperation from both chambers of the legislative body.

    Obamacare is deficit neutral and continues to be deficit neutral. Sure costs are rising, but that has more to do with the costs of care rising and little to do with the legislation. Premiums have been steadily rising almost 10% a year for the past decade.

  9. Ed Darrell says:

    Love the image of Uncle Sam showing his Hoover Flags.

    I’m reminded that Hoover tried austerity in tough economic times, and it only made the Great Depression worse. I am reminded that after World War II, with needs less than the needs we have today, with debt greater than we have today (as a percentage of GDP), Congress and Presidents Truman, Eisenhower, Kennedy and Johnson (less the latter two) borrowed like crazy and ballooned the national debt and deficits in order to educate the hell out of veterans, created the largest housing subsidy program in the history of the world, build a state-of-the-art, most-massive-ever road system, boost water treatment and sewage treatment, re-channel rivers and create great dams (don’t need more of those), build schools, and decrease poverty — creating the longest period of booming economy the world has ever seen.

    Debt is a virtue if you use it as a tool to do good, rather than as a tool to strike fear and stampede the weak-willed, sunshine patriots.

  10. John9880 says:

    Why not just report it? Bushies responsible for 94% of our national debt.

  11. Graphs always help clarify things, especially when talking about billions and trillions of dollars:
    http://25.media.tumblr.com/tumblr_lyqakuf5RU1qd96hso1_1280.jpg

  12. […] record corporate profits.  Now the only argument the right has is the skyrocketing national debt, but as I demonstrated here this has very little to do with President Obama’s […]

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