Debt and Deficits

Will President Trump Create More Debt Than President Obama?

Trump doesn't want to fix Social Security or Medicare.

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Trump
Polaris/Newscom

Libertarians and conservatives are skeptical of the government's ability to do anything well. But there's one thing the government excels at producing: debt. Granted, this isn't a good thing, but we must nevertheless recognize the government's skill at it. And just when you think it can't outdo itself, our government surprises you with an extra production of debt and deficit, just like that.

Case in point: the new Congressional Budget Office's budget and economic outlook for 2017 to 2027. The main conclusion is that the government continues to spend more money—faster and above and beyond the revenue it collects. In other words, our debt is growing big-time.

Obviously, we can't indefinitely spend 21 percent of our gross domestic product while collecting 17.8 percent in revenue. But it's particularly worrisome because we're already starting from a point of high deficit and debt levels. According to the CBO, under the current law, deficit spending will be $559 billion in 2017, but it will reach the trillion-dollar mark in 2023 and go on to total $1.4 trillion in 2027. As a share of the economy, the deficit will go from 2.9 percent in 2017 to 5 percent in 2027.

Think about that for a second. Assuming there are no recessions in the next decade, the CBO projects that within five years, we will return to the deficit levels we had during the Great Recession. At least back then, we knew that things were going to improve at some point. And they did, albeit very slowly. But it won't be the case this time. If anything, it could get worse if the economy were to slow down even further.

Do you know what else grows along with deficits? Debt and the interest we pay as a price for borrowing money from domestic and foreign investors. The debt as a share of the economy will go from 77.5 percent in 2017 to 88.9 percent in 2027, while our interest payments will balloon to $768 billion in 10 years, up from $270 billion this year.

As always, the culprit behind these deficit and debt explosions is growing spending on Social Security, Medicare, Medicaid, and interest on our debt. These programs have long been and remain the driver of our future debt. The CBO reports that they will consume $5 trillion of our $6.5 trillion 2027 budget.

Not to worry, you say; the Trump administration has promised to repeal the Affordable Care Act. It's true that the CBO budget doesn't take under consideration the promises made by the new president, including the one about getting rid of his predecessor's health care law. Unfortunately, we will have to wait and see what the new president and Congress actually end up doing on that front.

While it's clear that we are heading toward some partial repeal of the law, the rumors about what they are planning to replace it with aren't too reassuring. First, even though they've had seven years to do it, the Republicans still haven't coalesced around a replacement plan. Some would like to keep a few expensive features of the ACA, such as the ones benefiting dependents who are younger than 26 and people with pre-existing conditions. President Trump has made some off-the-cuff remarks about insuring every American, too. In other words, the replacement plan may end up being a drain on the budget just like the ACA.

We were told last week that the president would propose some big spending cuts. Call me a cynic, but I'll believe it when I see them implemented. For one thing, as mentioned earlier, President Trump has repeatedly said he won't touch Social Security or Medicare—the two programs the CBO says will be responsible for most of the spending growth in the next decade if nothing changes. Trump also made clear that he wants massive infrastructure spending and more spending on defense—and he talked about expensive paid family leave, as well as large child tax credits, on the campaign trail. If you add to that potential trade wars and increased levels of cronyism, we could see even more government spending than we have projected now.
To be fair, Trump wants to see fundamental tax reforms and deregulation implemented. However, it's hard to see how these policies, no matter how great they are, could generate enough growth—and hence revenue—to compensate for all that new and old spending. That is why, in four years, Trump may be able to truthfully call himself, not Barack Obama, the biggest debt creator of all time.

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30 responses to “Will President Trump Create More Debt Than President Obama?

  1. It’s all good. Deficits don’t matter. Trillion dollar coins. We owe it to ourselves. Etc etc.

    Trump promised to be a spendthrift, and will probably succeed since congress never met a spending proposal it didn’t fall in love with. But if he actually follows through on a few of his proposals, especially in the areas of rolling back regulation and cutting taxes, he might be able to roughly break even on new debt against GDP growth. The last 10 years have been anaemic by historical standards. If the Obama years had averaged 3% growth he’d have been the second incarnation of Bill Clinton.

    1. “If the Obama years had averaged 3% growth ….”

      *hearty belly laugh*

      Oh, you!!!

  2. For one thing, as mentioned earlier, President Trump has repeatedly said he won’t touch Social Security or Medicare?
    Trump probably wants to cut the big ticket government spending but cannot until most/all his other agenda items have been completed because old people will fight it and complain and complain. They “paid into” that Ponzi scheme and by God they are getting their “fair share” and more. Fuck those Gen Xers, Millennials and Gen Zers.

    All I can hope for is government spending trend downward when all the dust settles with the Trump administration. If everything else in the govt is cut some percentage, maybe we cacn have a rational discussion about cutting the big 3 (Social Security, Medicare and Military). If the military can handle cuts and be more efficient for defense, then SS and Medicare can handle cuts and be more efficient for recipients.

  3. So he would veto a entitlement reform bill if the “conservative” Republicans who run Congress passed one?

    Last I checked, Congress still controls spending. Maybe we ought to ask Paul Ryan and Mitch McConnell about some serious reforms and cuts?

    1. “Conservative” Republicans in congress rarely mustered the spine to deny Obama. Now that they have a president with an R after his name, what on earth would make you think they’d suddenly grow one?

  4. Presidents don’t create debt, the congress does.

    -jcr

  5. Libertarians and conservatives are skeptical of the government’s ability to do anything well.

    Please, please stop it with the “and conservatives” nonsense. Conservatives adore government and trust it to do all kinds of things.

    1. Thank god obergfell got government out of our marriages! And where’s my ubi, dammit?

  6. It’s gonna be a yuuuuge beautiful debt. The best debt!

    1. The debt clock has small hands?

      1. Yeah, but its penis is 11″ long

  7. His weak point may be spending and trade. Unless he’s laying the tracks down to begin the process of eventually tackling things like SS. SS is one massive issue and I reckon you can’t just say ‘Imma fix it’ without first deprogramming or ween people off; i.e. get them off the idea of relying on government to fund their retirement.

    Off all the insipid (and unhelpful) things the government did to citizens it was to promise them ‘cradle to grave’ perks and benefits.

  8. This article is of interest. Get it? Interest?

  9. He’s a populist, not a libertarian, and cutting SS and Medicare aren’t all that popular. We should just be appreciative that apparently cutting regulations is.

  10. The US Federal debt will never be paid down. Massive borrowing will continue unabated until the US currency is made worthless through inflation then a new currency will be introduced … The Ameridollar or Worldnote or whatever the financial powers-that-be call it.

  11. Spending was always the deal breaker with Trump for me. Trump went so far as to praise Obama’s stimulus in addition to TARP and the auto bailouts after all. It’s shocking to me how people who justifiably spread the hate on RINO’s who voted for TARP and the auto bailouts fell in love with Trump. I guess anti-PC and outsider-ism cures all.

    1. I don’t know if you’ve noticed, but the controlling majority of voters

      (conspiratorial whisper)aren’t really that rational about their political views

      They like good stuff and hate bad stuff, and occasionally get convinced to completely switch their definitions of good and bad stuff by emotion.

      1. I have to admit, the complete switch took me off guard.

    2. Yeah, I just cannot fathom how people I’d previously regarded as reasonably intelligent small-government, Constitutional conservatives drank the Trump-ade. I cold kinda-sorta understand if they’d merely argued that however odious Trump might be, he was still better than Clinton. What I can’t understand is why they would actively and enthusiastically embrace a guy who basically promised to wipe his ass with the same Constitution they claim to revere. Why would people who supposedly support limited government go full retard for a guy whose every proposal would result in a bigger, more expensive, more intrusive government? How can people who lambasted President I-have-a-phone-and-a-pen gush about how Trump is going to lay down the law to Congress? I just don’t get it. Some kind of Team madness, I guess. Or maybe they were in love with Top Men all along, and were just sad we had the wrong ones.

  12. So…what would you prefer.
    1) Trump spending all his political capital on SS and Medicare reform which will destroy his presidency as fast as you can say “AARP”. Republicans in congress aren’t going to throw away their core constituency over something like this and no way any Dems get on board. SS and Medicare cannot be touched unless the economy is booming….then, we have a shot at trimming it back.

    2) Trump attacking the waste and regulation that is stifling US business and innovation. Get the easy spending under control then we have the ability to either “grow our way out of the SS/medicare spiral” or have the budget surplus needed to “weather the boomer SS/medicare hump”.

    If he fargs up the economy and has no positive impact on growth…then, how are we worse than what Obama did? FFS, the economy has been slowly collapsing since the crash in 08. There was no recovery, inflation is killing family budgets and few have any ‘cushion’ left in savings/mortgage because they’ve used it up for base expenses.

  13. So the headline is based on CBO projections of spending proposals, without taking in to account ANY spending cut proposals?
    Maybe they didn’t get the email because it is trapped on Hillary’s server?
    Try again, but include removing the EPA, Dept of Education, UN spending, and half of HHS.
    I would also include the 28% of federal employees who say they will resign, but like Obama’s ACA promises, they are lying.
    I will wait for an article which cites sources to how Trump’s deficits are different from Obama’s.

  14. This is a PhD! No wonder things are so f-ed up. 10 \ 8 = 1.25. That’s trillions. Those who can DO, those who can’t TEACH! Obama had near ZERO interest rates. If the FED rate was 3%, you could add another 600 billion to the debt before spending $1.

  15. Will President Trump Create More Debt

    . . . good question.

    I think he may create more debt for me – a consumer – but not, necessarily for the government.

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  17. bviously, we can’t indefinitely spend 21 percent of our gross domestic product while collecting 17.8 percent in revenue. But it’s particularly worrisome because we’re already starting from a point of high deficit and debt levels. According to the CBO, under the current law, deficit spending will be $559 billion in 2017, but it will reach the trillion-dollar mark in 2023 and go on to total $1.4 trillion in 2027. As a share of the economy, the deficit will go from 2.9 percent in 2017 to 5 percent in 2027.
    ???? ?????
    ????? ????
    Think about that for a second. Assuming there are no recessions in the next decade, the CBO projects that within five years, we will return to the deficit levels we had during the Great Recession. At least back then, we knew that things were going to improve at some point. And they did, albeit very slowly. But it won’t be the case this time.

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  20. Entitlements are lies that have been told to the people since inception. When you say Trump doesn’t want to address it the truth is very few want to address it. We have an enormous population that doesn’t understand it, thinks a few taxes on the rich or a few less fighter planes will close the funding gap and all will be fine. For a politician that wants reform, the story is they want old people to die destitute, those who lie about it’s finances and say I’ll protect it are rewarded with votes for being so caring.
    Until we educate the people it can not be addressed except by the coming financial calamity.

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  22. “You know what else grows along with deficits?”

    That didn’t go the way I, uh, fantasized.

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