Trump Will Create More Debt Than Obama

In the Federal government’s fiscal 2020 year that is ending in three days, President Trump will have overseen a deficit exceeding $3 trillion. This will be after a year where it almost topped $1 trillion in fiscal 2019 when the economy was at least healthy.

These deficits put them on track for the four years that Trump has been in office to exceed the first four years that President Obama was in office when the economy was digging out of the Great Recession.

Before we get into the numbers lets address the argument that Covid-19 is the reason that this year’s deficit is so large. It is correct that the coronavirus and the subsequent shutdown of the economy forced the government to spend trillions more than planned (about $2 trillion). However, it can also be argued that if there had been a coordinated, transparent Federal response the impact would have been less.

It should also be pointed out that the statements about how much debt was generated by Obama typically leaves out that when he entered office that the economy was in the teeth of the Great Recession, which he had no control over.

And for all Presidents’ it should be noted that the first year’s deficit they are in office is also out of their control. The fiscal year is already four months over and their predecessor put the Federal budget in place. It is more appropriate to look at the deficits and debt offset by at least a year, if not two, to allow a new President time to implement their programs. The numbers below include the fiscal year that Obama and Trump were inaugurated.

First four years

Presidents’ have to deal with the cards they are dealt. As noted above Obama inherited the Great Recession, while Trump has had to deal with a pandemic.

In Obama’s first year the deficit increased almost $1 trillion, from $458 billion to $1.41 trillion. It slowly moved down the next three years for a total of $5.1 trillion for his first term.

In Trump’s first three years the deficit increased from $585 billion in fiscal 2016 to $984 billion in fiscal 2019, up 68%, for a total of $2.4 trillion. If the coronavirus had not hit this years deficit was on-track to be $1.1 trillion, per the Congressional Budget Office or CBO, which would then make Trump’s first four years deficits total $3.5 trillion. At $1 trillion or more this would have been the largest budget deficit in history with a growing economy and the largest as a percentage of GDP outside of recessions or World War II.

However, this year’s budget deficit is expected to be $3.3 trillion according to the CBO. This will make Trump’s first four years total deficits $5.7 trillion vs. Obama’s $5.1 trillion.

Obama’s two terms vs. Trump if re-elected

Even after four years Trump will generate almost as much debt as Obama did in eight, $5.7 trillion vs. $7.3 trillion, respectively. And the CBO projects that the $1.8 trillion forecast for next year will make Trump’s total $7.5 trillion, surpassing Obama’s eight years. Based on the CBO’s projections, if Trump is re-elected he will create over $11 trillion in debt.

Obama’s last three years vs. Trump’s first three

Probably a more “fair” way to look at how large the deficits are between Trump and Obama is to total the last three years Obama was in office and Trump’s first three since the economy was in essentially the same shape during those six years.

During Obama’s last three years the total deficits were $1.5 trillion vs. Trump’s $2.4 trillion. These periods were after the Great Recession and before the pandemic impact.

As a percentage of GDP

Another way to analyze deficits is to compare them to GDP. This helps to remove the impact from a larger economy and the natural increase in financial numbers.

In Obama’s first year dealing with the Great Recession the deficit was 9.8% of GDP. This declined to 6.6% in his fourth year and was 3.1% in his last.

Trump has overseen deficits that have increased as a percentage of GDP every year and will explode in his fourth year. It started at 3.4% in his first year, grew to 3.8% and 4.6% in the next two, as his tax cuts did not generate enough growth and revenues to overcome the lower tax receipts. And this year the Congressional Budget office projects that the deficit will be 16% of GDP and only fall to 8.6% next year when the deficit is forecast to be $1.8 trillion.

Source: Forbes – Money