Remember When Obama Said He Was Going To Fix The National Debt

Who created more national debt, Trump or Obama?

Either this question was written by someone who does not know the huge differences in economic conditions in 2009 and 2017, or the question is deliberately begging for an answer that seriously distorts reality.Obama entered in 2009 after worst economic decline since the Great Depression in the 1930s. This mess was largely created by Alan Greenspan and financial friends, who believed that financial regulation was barely needed at all, because no businessman would do anything destructive to make a few extra billion. The enormous flaws in the system included: (a) Securities rating firms competed to confer AAA ratings on junk securities, particularly secures that were packages of born-to-fail mortgages; (b) bankers who sold rotten mortgages to the public could sell them to greater fools, so they had huge incentives to create more junk. This willful blindness is stock-and-trade among free market fundamentalists.Trumpsky came into office during the strong recovery engineered by the previous administration. He proceeded to undermine the system of progressive taxation that has two great benefits: (a) progressive taxation is the best way known to limit income inequality. Germany’s pretax income distribution looks a lot like ours, but it’s post-tax income distrubution looks more like that of other European nations. (b) the U.S. economy is riddled with oligopoly power (economists call this “monopolistic competition”). Progressive taxation undoes the worst of the damage of this oligopolistic system. (c) Trumpsky’s tax cuts are aimed at the heart of social security, medicare, Medicaid, public support for education at all levels, environmental protection, the state department, and anything else the government does, except law enforcement and military aspects of national security. The Republicans think we are sooo dumb that they can turn around and claim that the huge deficits created their tax cuts for the wealthiest must be fixed by slashing these programs. These guys have a substantial fraction of the population pegged correctly.

Obama has nearly doubled the US national debt while claiming to reduce the deficit by about 70%. How is this possible?

Debt and deficit are two different things. Debt is what you owe, deficit is what you lose annually. If you win every year, it’s called a surplus. Your annual deficit is added to your debt while a surplus would be deducted.If your debt is already high, then you will have to pay a high interest annually. The interest becomes part of your deficit, so it is added to your debt. So once your debt has grown, it becomes difficult to reduce it. But really keep you eyes on the deficit, that is what matters.Actually you should look at your deficit relative to your GDP, Gross Domestic Product. That is because if your GDP grows a lot, should you be so lucky, it doesn’t really matter that much when your deficit or your debt grows a little bit. Your debt relative to GDP can fall even if the debt is rising. And that is fine.So both claims are right, the debt has risen, and it will keep rising as long as there is a federal deficit. It will only fall when there is a surplus.Do you demand a surplus?The current deficit is estimated to be around 3% of the GDP in 2016 (2.5% in 2015). In the last of Bush’s budgets the deficit was 9.8% of the GDP. This was in 2009 (the departing president leaves a budget for the coming president).So it has been reduced substantially during Obama’s presidency. Actually it was reduced every year, except between 2015 and 2016. I am not sure who should be credited for it (the congress has a say in the budget). But there is still a deficit (only Bill Clinton produced a surplus in recent years), and therefore the debt grows.Do keep a keen eye on the federal deficit (relative to GDP) from now on. That is a very good idea.

I think that President Obama raised the national debt by $9.3 trillion. How can anyone say he did a good job as president?

There are several things one has to remember when discussing the increased debt from FY “09 to FY ’17.On September 30, 2008 (last day of FY 08) the national debt was at 9.2 trillion dollars. Let’s remember this was 112 days prior to Obama taking office. During those 112 days America was in the middle of the 2nd largest economic collapse in US history. On January 21st 2009 the US national debt was at $10.6 trillion dollars. That’s an addition of $1.4 trillion that many on the right are charging to President Obama that was incurred before he even took office.Between Jan. 21, 2009 and the end of FY 10 (21 months) there was $3.9 trillion added to the debt which were expenses for expenses incurred before Obama took office. Including the actual cost of the two theater war which began in the fall of 2001 that Bush II had kept “off book” that Obama placed ON the books. Plus the costs of bank and corporate bailouts due to the economic collapse incurred during the previous administration.Federal dollars given to states to help alleviate unemployment benefits and well as the federal SNAP program, due to the millions of jobs lost during the economic collapse.Medicare cost mainly attributed to an aging population have attributed to $1.1 trillion in the national debt since FY ’09.Following FY ’11 the national debt began growing at a slower rate. This was due to 3 items. 1) Loan paybacks from GM and Chrysler, as well as an Energy department project investing in renewable energy manufacturing. (yes this was the program which began in 2005 under the GWB admin and remains today. This is the same program which received guff for the Solyandra bankruptcy. However, what many have not heard is that beginning in 2012 this program for the first time ever made a profit from repayment of loans given out during FY 2009/10.Beginning in 2013 the debt began growing at an even slower rate when the Unemployment rate dropped at a faster rate and more tax dollars came in.In FY 2016 the national debt grew $546 billion dollars. The lowest growth in the debt since FY 2005. In FY 2017 the debt grew $644 billion, an increase in the growth rate of nearly $100 billion. FY 2017 was the first year the debt growth rate grew from the previous year for the first time since FY 2012.The largest contributor of the national debt since FY ’05 has been decreased tax revenue following the tax cuts enacted in 2003.

President Obama left the US with $20 trillion in debt. How much is this likely to increase under President Trump in the next 4 years?

It’s impossible to answer your question at the moment because we don’t yet know which of his initiatives Congress will actually approve. But on the optimistic side, let’s imagine that Congress implements everything Trump wants done, the US debt will be the least of your worries.He plans to drastically lower taxes on the wealthy, on corporations etc. So less revenue for the Federal Government. That in turn means less social services for average Americans. But don’t worry, you’ll have jobs thanks to the infrastructure initiatives he’s going to implement, provided of course you work for one of Trump’s preferred contractors AND don’t mind making less than minimum wage which won’t exist anywys.While you’re happily employed shovelling gravel or whatever, you’d also better hope you don’t get sick or injured becaue if you do, you won’t have any insurance because it’ll have been priced so far out of your reach that you’ve done without, preferring to put food on the table.Speaking of which, the vegetables and fruit that you used to buy, that were imported from places like Mexico have all had tarrifs imposed so a tomato will now cost you more than you make in an hour while doing manual labour to “Make America Great Again”.The TV will report glowing increases in agricultural yields by US farmers but that won’t translate to food on your plate. US factories will be churning out cars that you can’t afford and that long held dream of owning a home will be a distant memory.Don’t forget to say thanks on Jan 20, 2018 because remember, that’ now Trump’s “National Patriotic Celebration” day and you’d better behave!