Everything You Always Wanted to Know About the National Debt, but Were Afraid to Ask ... a Liberal

Exposing the Republican spendthrifts.

I don't exactly know why but I have had the hardest time finishing this particular post. I completed most of the research and wrote the rough draft well over a year ago. I keep coming back to it but for some reason I just haven't been able to pull it all together into a cohesive essay. Perhaps it's because the subject matter is a bit dry and doesn't lend itself well to my usual sarcastic broadsides. I know it's partly because I think we all agree it's an important issue and I wanted to be sure I had all of my facts straight before spouting off. Better late than never I suppose so here goes.

There are few subjects in our current debate more misunderstood than the size and source of our national debt. What prompted me to seek a better understanding of this were some rather startling claims that some of my more conservative friends were making. “Obama has spent more than all of our other Presidents combined” went one, and more recently “In just three years Obama has increased the size of our national debt 60 percent!” Now that we're in election season hardly a day goes by that I don't hear some form or hybrid of this argument. There is now a well crafted narrative on the Right that our current President has been off on some sort of crazy spending spree. This only reinforces the long held belief by many Americans that Republicans are the more fiscally responsible party and that all Democrats are big spenders. So let's look at that.

Some Background

Since the President has the bully pulpit and holds the veto pen I'm going along with the Republican premise that the Oval Office holds primary responsibility for increases in our debt. To paraphrase, “the buck stops there.” Besides, the truth is most major spending initiatives have the President's fingerprints all over them and sometimes even his name attached. So there's something I think we all should agree on for the most part.

You may have heard that our national debt (ND) has recently topped $16 trillion. Yikes! While this is true, it's important to understand that there are two separate components of this debt; publicly held debt and intra-governmental holdings (IGHs). This is where it get's a little tricky so stay with me. By law, most federal pensions and any Social Security surpluses must be invested in “special issue” Treasury Bonds. So instead of selling our debt to outside investors, in this case we are in effect investing in our own debt. This actually makes sense when you consider that United States Treasury Bonds are still considered the safest investment in the world.

These investments are what make up the Social Security Trust Fund which currently has a balance somewhere in the neighborhood of $2.6 trillion. Think of it as a giant 401k account invested entirely in Treasury Bonds. Until this past year Social Security had collected more in taxes than it paid out in benefits for almost 30 straight years. While these bonds act as an investment for Social Security they also add to our total debt. At the end of July 2012 the total ND was $15.93 trillion. Of that number, $4.81 trillion consisted of IGHs while only $11.12 trillion was publicly held debt.

While researching this, it became evident that until fairly recently most of the reporting on the ND cited just our publicly held debt, probably because the amount of IGHs were relatively small. This seems to have changed for good during the Bush years and now IGHs are routinely included in the reporting of our total debt. There is some small solace I suppose in knowing that roughly a third of our debt is money we owe ourselves. Still with me? Hang in there.

About Fiscal Budgets

Now, when it comes to determining where the responsibility lies for this enormous debt, it's also important to understand how fiscal budgets work. In the private sector, a company's fiscal year doesn't always correspond to the calendar year. For example, a large retailer's fiscal year may span from the first of March to the end of the following February. This is done for accounting purposes so that holiday sales and returns are taken into full account to give an accurate picture of a firm's fiscal health. The timing varies by industry.

And so it is with our federal government. The federal government's fiscal year (FY) runs from October 1st of the previous year to September 30th of the current year. The first budget that each President is responsible for is actually the first fiscal year budget following his inauguration. For President Obama, that would have been the budget for FY 2010 which began October 1, 2009. President Bush was responsible for the FY 2009 budget which took effect October 1, 2008, a full month before President Obama was even elected. No President is responsible for the majority of debt that accrues during his first nine months in office, that spending was agreed to by the previous administration.

The Republican Revolution. Charge!

So let's look at a little budgetary history. When Carter enacted his first budget in October 1977 (FY '78), the ND stood at $699 billion. Carter was responsible for the '78, '79, '80 and '81 budgets, at the end of which the ND was $998 billion. This was an increase of $299 billion or 43 percent. This was also the starting point for Reagan whose budgets ran from FY '82 through FY '89 and ended with the ND at $2.86 trillion. So Reagan increased our debt by $1.8 trillion or 186 percent nearly tripling it. In the four years following, George H. W. Bush managed to add another trillion and a half dollars so by the time Clinton's first budget rolled around, FY '94, the ND had grown to $4.41 trillion.

Let's recap. In just 12 years, Republican administrations quadrupled our ND borrowing almost $3.5 trillion. And the best was yet to come. Even though Clinton managed to balance the budget his last four years in office (Clinton was responsible for FY '94 - FY '01), our debt grew another $1.3 trillion during his two terms. This was partly because of the massive increase in debt service created by Reagan/Bush and also due to an increase in IGHs as Social Security was collecting healthy surpluses during that time. At the end of the Clinton Administration the Congressional Budget Office estimated that we had turned the corner and were actually on track to significantly lower the ND over the next decade due to Clinton's budget surpluses.

Now here comes the really fun part. George W. Bush began his term with budget surpluses and although the ND had grown to $5.8 trillion the future outlook was bright. All Bush had to do was to continue the policies that had made Clinton so successful, right? RIGHT?? Instead, Bush slashed revenues through two rounds of tax cuts and increased spending exponentially. By the end of his final budget on 09/30/2009, the ND had ballooned to $11.9 trillion. In eight years Bush managed to borrow over $6 trillion, doubling our debt. Most of this borrowed money went towards paying for the Bush tax cuts and to government contractors associated with his two wars. Hundreds of billions were also funneled through Bush's Medicare D program into the pockets of PhRMA.

Between the end of the Ford and Bush administrations, our ND grew $11.2 trillion, 85 percent of which accrued under Republican Presidents. The Bush years are a true glimpse into GOP madness. For years Republicans have talked about "starving the beast" and privatizing Social Security and Medicare. Now they've created a scenario where this actually seems possible. Who cuts taxes while prosecuting trillion dollar wars and giving billions away to pharmaceutical companies? This was either the work of a complete bunch of slack jawed, drooling idiots, or something much more sinister; a well thought out plan to create economic chaos. I'm not much of a conspiracy theorist so I'll stick with the former but it does seem awfully convenient to their cause.

Cleaning Up The Mess

The last three budgets enacted under President Obama have added another $4 trillion to our debt even though the rate of growth in government spending has slowed substantially. It is important to note that the bulk of Obama's deficit spending is the result of much lower tax revenues and necessary safety net and stimulus outlays due to The Great Recession. You can spin this one of two ways. Either Obama has accumulated one-quarter of our ND in just under four years, or, based on his predecessors' doubling and tripling of our debt he still has a long way to go. Either way, I think we all agree we have too much debt. What we don't agree on is how to address it.

Unemployment is without a doubt the single largest contributor to our current deficits. Unemployment, and under-employment, lead to more Americans being thrust into poverty and finding themselves forced to rely on government safety net programs to feed their families. At the same time government revenues, primarily tax collections, are the lowest percent to GDP since 1950. Fewer people working means less income to tax and taxes have been lowered even more in order to help stimulate the economy. We are caught in a vicious cycle.

The Republican answer to all of this is to lower taxes on the wealthiest Americans while slashing programs that aid the poor and middle-class. Their fetish for shrinking government has cost us over 650,000 state and local public sector jobs since Obama took office creating more of a drag on an already sluggish economy. Republicans hold resolute to their peculiar brand of "trickle down" economics ignoring the fact that it just doesn't work.

Democrats on the other hand want to put people to work. The President presented a jobs bill to Congress over a year ago that would have created over a million new jobs building much needed infrastructure. The President's proposal was fully paid for with a very modest tax increase on incomes over a million dollars. He has repeatedly called on Congress to act to get America working again but Republicans have blocked every effort at job creation. It seems they are intent on letting the economy languish until after the election.

The Obvious

Regardless of who you think is at fault for the current standoff one thing is crystal clear; contrary to what you may have heard Republicans are not the party of fiscal responsibility. Republican Presidents have been responsible for significantly more of our national debt than their Democratic counterparts. And what do we have to show for their profligate spending? Crumbling infrastructure, runaway unemployment, a failing education system and a middle-class in decline. Seriously, where did all of that money go? These are questions every American needs to ask themselves when they head to the polls in November.


Most of the data used in compiling this report can be found at TreasuryDirect.gov

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.

Larry Reid September 15, 2012 at 11:59 AM
I understand supply and demand but printing new money due to failed policies, devalues the dollar. From there you can spin it how it best works for you. Either way, it costs more to get less. And, the whole idea that debt is okay when we owe it to ourselves is just as ridiculous as saying Clinton had surpluses while having trillions in debt. I'll budget $10 but only have $4. I spent $7 so now I have a $3 surplus. Not hardly. Keep your eye on the shiny quarter over here.
North Georgia Weather September 15, 2012 at 12:36 PM
Another ratings firm downgrades Us credit rating: http://www.foxbusiness.com/government/2012/09/14/fearing-qe3-egan-jones-downgrades-us-again/
Karsten Torch September 15, 2012 at 01:21 PM
Brian, let me start off my saying, and I mean this, good job on the article. You actually didn't go as partisan as I was expecting, and you did some good research. This was one I enjoyed reading. That being said, there are a couple of things I would like to take issue with. Typically, the first 9 months ARE the previous administration's. And we all know GW liked to spend money (one of the main problems we Conservatives have with him). However, a majority of what was spent was either drafted or requested by Obama, making the money spent his responsibility. He specifically requested the second half of the bailout money, and the stimulus was all his. So he gets credit for that whole thing. The other one that gets me is the Clinton surplus. Keep in mind this is a PROJECTED surplus, based on the economy at the time. And the fact that Clinton had a republican congress his second half, which I do have to admit Clinton was very good at playing nice with. But we had the dot.com bubble, which burst not long after. So we went from tons of income and spending to pretty much nothing. Amazing what kind of effect that can have on revenue and budgets. Also, keep in mind, too, that the President's jobs bill didn't even get passed among democrats. It wasn't just Republicans that killed it. That being said, though, the bill probably wouldn't have done anything good. Wrong approach...
Karsten Torch September 15, 2012 at 01:29 PM
My point to the above is kind of what you started with - we are all in this together. Republicans have added to the deficit, quite well. To be fair, they've usually had a democrat congress behind them when it happened, but you're right - the buck stops with the president. This is why I more prefer the moniker for us of Liberals and Conservatives. Even though it tends to put us a little further apart on the scale, it's more accurate on our leanings. Even though I'm conservative, I tend to find that I'm more at odds with the current GOP makeup. So we'll feel free to share blame all around, but the stuff that's Obama's needs to stay with Obama - just like Bush's faults.
C.J. September 15, 2012 at 05:01 PM
NGW, In your 7:31 comment, you said that the downgrade is important because it "it changes the interest rates we pay." The S&P downgrade happened over 13 months ago. You didn't answer me the first time or the second time, so I'll ask you again. Has that ratings downgrade increased the interest rates we pay? Okay, you've obviously painted yourself into a corner, so I understand why you don't want to answer the question. No problem. Of course, the answer is no...interest rates have not increased since S&P foolishly downgraded our debt. (Rating agencies have lost credibility for many reasons, not the least of which is their culpability in causing the recession by rating junk as "AAA"). Anyway, it seems to me that if you're going to get worked up about U.S. credit ratings under the guise that they influence interest rates, but subsequently learn otherwise, that you would move on to another faux right-wing outrage to get worked up about. To each his own, I suppose. http://finance.yahoo.com/echarts?s=^TNX+Interactive#symbol=^tnx;range=2y;compare=;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;
C.J. September 15, 2012 at 05:29 PM
Larry, The Federal Reserve "prints money" (i.e., increases and decreases the money supply). That is what they do. Do you get mad because fish swim and birds fly? Have you always been angry about monetary policy? I mean, Milton Friedman used to be a conservative hero. http://www.federalreserve.gov/monetarypolicy/fomc.htm You people have gone so mad that you get outraged when a cat meows or a dog barks, as if our pets only started meowing and barking after Obama was inaugurated. The Fed was established specifically to stabilize the economy...grow it when it is too weak and people are out of work...slow it down when it is too hot and core inflation is rising too much. That is what they have been doing under every Republican and Democratic President since they were created, and that is what they will continue to do...even if Romney is elected. The critics are making two contradictory arguments. The Fed's actions will make the economy worse (inflation). And the Fed's actions are intended to help Obama? But if the Fed's actions will make the economy worse, then how will that help Obama? The truth is that Republican pundits are aware that, by following it's mandate to increase employment, the Fed will contribute to making the economy better--hence the outrage.
R++ One of the Famous Dacula Crew September 15, 2012 at 05:36 PM
Artificially low FED engineered rates are GREAT! The concept worked so well during beta test in the real estate boom, you know borrow mega amounts now - pay some interest and make the balloon in 5 to 10 years or so... When the rates reset it will be a show, maybe that's why everybody wants to spend and borrow it ALL right now. When the outside event occurs that stops the train we are on, it will be all at once life altering... Cause we will just wipe it all out with a stroke an executive non-order from the President.
C.J. September 15, 2012 at 06:07 PM
RE: "The other one that gets me is the Clinton surplus. Keep in mind this is a PROJECTED surplus, based on the economy at the time." No, ma'am. We had ACTUAL surpluses when Clinton was president. http://www.factcheck.org/2008/02/the-budget-and-deficit-under-clinton/ Some of the drivers of the deficits are (in no particular order): 1. Bush tax cuts 2. Wars in Iraq and Afghanistan 3. Medicare Part D 4. Economic recession causing lower revenues and higher unemployment and other such payments. http://economix.blogs.nytimes.com/2012/06/12/the-fiscal-legacy-of-george-w-bush/ (Note that the guy who wrote the article served under Reagan, Bush 41, Jack Kemp and Ron Paul). So, how do we fix the deficit? 1. Go back to the Clinton tax rates (at least for upper income earners) 2. Bring the troops home. 3. Allow Medicare to use its negotiating power to negotiate prescription drug prices. 4. Put people back to work so that we can grow the economy and have more taxpayers. Incidentally, if you think that TARP and the Recovery Act caused our deficits, you might want to do a little research to determine how much TARP cost us (don't forget to subtract the money that was paid back) and how much was actually spent each year by the stimulus (hint: annual stimulus spending was a fraction of what the pundits would have you believe).
Becky Tollerson September 15, 2012 at 06:16 PM
Thank you Brian for this well written and detailed article on a complex subject matter that we all want to understand.
C.J. September 15, 2012 at 06:26 PM
RE: "Artificially low FED engineered rates are GREAT!" "Artificially" low rates? I don't even know what that means. The economy didn't crash because of interest rates. It crashed because lenders made risky loans because they didn't care if the loans got paid back (they sold the mortgages). http://www.washingtonpost.com/opinions/the-lost-bank-the-story-of-washington-mutual-by-kirsten-grind/2012/07/20/gJQAsPoQ0W_story.html Interest rates are low because millions are still out of work and so the recovery is slow. What is the alternative? Do you prefer higher interest rates? Is the economy too strong for you? Not enough people out of work? Too many people buying houses or refinancing their mortgages? You actually seem to be rooting for a weak recovery.
M.A.Dawson September 15, 2012 at 06:38 PM
Becky, all due respect but if you truly want to understand this not so complex subject, do the research yourself. Once a liberal is done spinning a subject such as this, you will most likely be far less informed.
barbra labour September 15, 2012 at 07:27 PM
I to have read the numerous "amendments " to our social security laws .. well I skimmed as much as I could from the 1900 s on.. my eyes .. my eyes.. but back to what I wanted to say: I understand that the blame game... is for everyone... our washington reps.. and most of all the american voters ...my view is that we have (agreed to pay for alot of things this country can not pay for.. with out borrowing money...) and when mistakes made with money are not corrected.. well you know what they say.. dont mess with peoples money... oh yea.. and I do believe there is a credit limit...... we pay these people in washington alot of money to do a job.. and balancing the budget should be the number one thing on there to do list. period.. but I am just an old lady.. believing you should pay your bills..... on time. instead of fighting ... pull together and getter done..
Otis The Town Drunk September 15, 2012 at 07:41 PM
Why is it that Democrats pull the war card to criticize Bush as unnecessary and costly yet praise Obama for war activities such as our Military whacking Bin Laden, pulling out of Iraq (lots of cost savings right?) and presently intimidating Libya? You guys do understand how we became a free people. Right? There are costs involved to avoiding tyranny and death. Twist the story however you want to explain the debt but either way, Bush, while appeasing Democrat, Senate spending, still spent/wasted 2 TRILLION DOLLARS less in 8 years than Obama has in 4 years? Forget that first 9 months is the last guy’s budget garbage. If that’s fair game and Romney wins 2012, I want to see democrats excusing him for the first two trillion that will be wasted under his first 9 months. That’s all horse crap. I’m giving this a C+ for hard work, 17 paragraphs and for being a subject that every pro-creating American should be interested in.
Otis The Town Drunk September 15, 2012 at 07:54 PM
"(hint: annual stimulus spending was a fraction of what the pundits would have you believe)." Here is another one that dems use as ammo. Do you people actually think that Republicans get their facts by listening to Neal Boortz on their lunch break? If you do, please send me your address so I can forward my cable and internet costs. We all have have the same resources available. How we choose to interpret may be another issue.
Brian Crawford September 16, 2012 at 02:24 PM
Thanks Becky. And MAD, where's the spin? The facts are pretty straight forward. You may take take issue with my focus on fiscal budgets but then you'd be shooting holes in a favorite conservative argument. Conservatives squeal about running government as a business all the time and there is nothing more fundamental to business accounting than the reliance on fiscal budgets.
ED CARR September 17, 2012 at 11:00 AM
Spin baby spin. Good job of spin.
Robert Saunders September 17, 2012 at 11:31 AM
I liked your article - I just need to know some of your thoughts on: 1. Clinton's second term was with a Republican majority in both Senate and HR - did this come into factor in his balancing the budget? 2. In George Bush II second term the last two years the Democrats controlled both Senate and HR. How did this work out? 3. How is it that the Democrat controlled Senate has not had a budget for 3 years? I think the majority of the issues are that there is no efforts to compromise. I believe there is a middle ground but factions on both sides of the aisle are so entrenched that they cannot see the forest for the trees. It also seems that if you disagree with someones view you are personally lambasted as either being a communist liberal or a racist conservative. i would love to have a meaningful dialog without the personal insults.
Brian Crawford September 17, 2012 at 12:33 PM
Hi Robert and thanks for the kind words. 1. I think the Republican Congress under Clinton deserves a great deal of credit for balancing the budget. It's sad that today's GOP has lost the desire to govern. The current bunch of bozos would never give Obama such a victory to hang his hat on. That's why the Grand Bargain failed. 2. Too little too late. Bush did all of his damage during the previous six years. I can't think of any major spending initiatives during his last two years that significantly added to our deficits. 3. Obama has had a filibuster proof majority in the Senate for only five months of his entire tenure. Republicans have used every trick in the book to derail the normal budget process in order to score cheap political points. I agree wholeheartedly with you about the personal insults but Democrats have been much more willing to seek compromise. Today's Republican party simply refuses to do so under any circumstances. They are dedicated to one thing, regaining the White House at all costs.
NJ4America September 17, 2012 at 12:57 PM
Brian, you have no issue blaming Bush for his first 6 years but won't blame Obama for his first 4.
Brian Crawford September 17, 2012 at 03:34 PM
There are certainly things to be critical of Obama for. However, the situation each inherited is as different as night and day. Bush bears full responsibility for doubling our debt when he was handed surpluses and a robust economy. Imagine how vastly different things would look today without his bumbling. We might very well have most of our debt paid off by now, that was our trajectory when he took office. All of Obama's spending has been necessary to keep us from going a cliff. He has slowed the rate of government spending and saved billions in waste and abuse. If Congress had worked with him to create jobs our recovery would be much further along.
George Wilson September 18, 2012 at 02:47 PM
@ Brian Crawford Another quality article everyone should read.Thanks for your work and the great information.
Chris September 18, 2012 at 02:51 PM
Well it's no surprise that George Gibson would approve.
Athens Mama September 19, 2012 at 12:26 AM
Well written article; I appreciate the research. I will say that the failing education system is a bipartisan issue. Both liberal and conservative positions have contributed to our downfall. The non-sorting of Special Education, federal Special Education laws that disable administration when they are trying to protect students from violence, the attempt at improving standards in Education with once a year, high stakes testing evaluations, as well as evaluations that are completely obtuse - such as insisting that even non-verbal students with Special Education needs or students with severe intellectual disabilities must be included in school test score improvement requirements. Teacher unions - who stand behind teachers no matter what, even when they work against the good and rights of the customers - the students and families. I know I will take a lot of heat for these posts, but I am tired of seeing someone to represent EVERYONE except the CHILDREN in Education.
lynn shaw September 19, 2012 at 02:38 AM
I would like for some of our more learned republicans to comment of how much of our national debt has been accrued to pay for the Bush wars including our military costs as well as the payments to so called private companies employed as surrogates over the last few years. The neocons ignored bin laden leading up to 9/11 and even after that were wanting to punish Iraq and we wasted billions of dollars instead of taking out bin laden. How much has that cost our country.
Global Warming September 19, 2012 at 02:51 AM
What do you suggest Bush should have done after 911?
Brian Crawford September 19, 2012 at 02:15 PM
How about vigorously pursuing those responsible for for the 9/11 attacks and not inventing a reason to invade Iraq to settle a family feud.
Brian Crawford September 20, 2012 at 12:29 AM
Thanks George, always good to hear from you.
Brian Crawford September 20, 2012 at 12:44 AM
Thanks for the link C.J. Good stuff.
NJ4America September 23, 2012 at 04:35 PM
Brian says "two men who have sex with each other getting married" Sounds like a busy wedding. Brian can post what ever I suppose
Athens Mama September 23, 2012 at 06:13 PM
@NJ4America: How does this pertain to the topic at hand?


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