National Debt Passes $21 Trillion Mark As Republican Budget Deficits Begin To Rise
The National Debt has passed $21,000,000,000,000 for the first time in history just as the nation begins its return to the era of trillion dollar budget deficits.
Since Donald Trump became President, the National Debt has increased by nearly $2 trillion and hit $21 trillion for the first time in history:
About a year ago, President Trump pledged to eliminate the national debt “over a period of eight years.” But for the first time in history, the national debt surpassed $21 trillion this week, according to the U.S. Treasury.
The landmark comes shortly after Congress passed, and Mr. Trump signed, a suspension on the federal debt limit last month, allowing the government to borrow an unlimited amount of money until March 1, 2019.
When Mr. Trump took office on Jan. 20, 2017, the national debt was $19.9 trillion, according to U.S. Treasury data. Since then, the GOP-led Congress has passed a $1.5 trillion tax cut bill and a two-year spending deal which, together, are expected to drive the deficit and debt further upward. The Committee for a Responsible Federal Budget estimates annual deficits could top $2.1 trillion per year in the next decade, which would send the national debt soaring even higher.
Republicans railed against the national debt level under the Obama administration, when it jumped from $10.6 trillion to $19.9 trillion, nearly doubling, but few have been as outspoken about the situation with Republicans controlling Capitol Hill and the White House. Sen. Rand Paul, R-Kentucky, held up the spending bill last month on the Senate floor, blistering Republicans for doing exactly what they had criticized the Obama administration for doing.
“I ran for office because I was critical of President Obama’s trillion-dollar deficits,” Paul said at the time. “Now we have Republicans hand-in-hand with Democrats offering us trillion-dollar deficits.”
This comes at the same time that one of the President’s top economic advisers has been claiming, falsely, that the debt and deficits are declining:
Larry Kudlow, the president’s top economic adviser, claimed on the Fox Business Network on Friday that the federal deficit is “coming down rapidly,” as a result of President Trump’s pro-growth policies. But the Treasury Department, Congressional Budget Office, and outside think tanks disagree with him.
“As the economy gears up, more people working, better jobs and careers, those revenues revenues come rolling in, and the deficit, which is one of the other criticisms, is coming down, and it’s coming down rapidly,” Kudlow told Fox Business’ Maria Bartiromo, who did not appear to challenge him on that statement. “Growth solves a lot of problems.”
Kudlow did not say how he believes the deficit — essentially the amount the government spends that is more than what it takes in as revenue — is going down, when the Treasury Department and Congressional Budget Office say otherwise. (The deficit is not to be confused with the national debt, which is the accumulation of deficits, year over year.)
The federal deficit in fiscal year 2017 was $666 billion, according to the Treasury Department. It is projected to be $804 billion in 2018 and $981 billion in 2019, according to the Congressional Budget Office’s (CBO) figures in April.
The CBO issued a grim report Tuesday on the country’s fiscal future, finding the GOP tax law is expected to add $1.84 trillion to the deficit over the next decade. Economists, as well as the CBO, blame a combination of increased spending and the tax law changes that are resulting in lower revenues, on top of already-rising spending on programs like Social Security and Medicare.
The Treasury Department also disagrees with Kudlow’s assessment that the deficit is headed in the right direction.
In May, the Treasury Department posted a $147 billion budget deficit, which is 66 percent higher than the deficit posted in the month of May 2017.
The Committee for a Responsible Federal Budget released a statement later Friday claiming Kudlow’s claim was untrue.
“We rate this claim as false,” the CRFB wrote. “Not only are deficits not falling rapidly – they aren’t falling at all.”
“Kudlow is correct that a growing economy can produce more revenue, which would help reduce the deficit,” CFRB added. “However, unpaid-for legislation, such as the 2017 tax law and 2018 spending deal, only widens budget deficits, negating the effect of a growing economy.”
This hardly surprising, of course, because as I’ve said many times in the past the supposed Republican fidelity to fiscal responsibility and their concern about rising Federal Budget deficits and the National Debt is something that has proven to be little more than a political slogan that was largely based on who controlled the White House. During the Presidencies of Bill Clinton and Barack Obama, for example, Republicans argued that out of control spending and deficits were destined to drive up interest rates, cause the national debt to explode, and increase interest rates. They used these issues as political cudgels against the Democratic White House during both Administrations and, of course, as a way to appeal to voters and supporters during the elections that took place during those Presidencies. During those times that the GOP managed to take control of both the White House and Congress, though, the message was quite different and the true nature of the Republican Party and its alleged concern for deficits and debt was revealed for the fraud it that it is.
During the Administration of George W. Bush, for example, Republicans managed to preside over massive increases in spending that were quite plainly fiscally irresponsible. On the domestic side of the equation, they introduced a massive new trillion dollar entitlement in the form of Medicare Part D without finding a way to pay for it. Similarly, they introduced education policy legislation such as the No Child Left Behind program that led to increases in Federal spending, again without any provisions about how it was going to be paid for in the future. Under President Bush’s leadership, they authorized and fought two wars, only of which was actually justified and necessary, that imposed serious financial burdens on the Federal Government both while the war was being fought and well into the future. On top of all that, they cut taxes. While that is not a bad thing in and of itself, and I’m certainly not going to argue against the lower tax burden that I and most other Americans had during the Bush years, from the perspective of fiscal responsibility it’s an utterly insane strategy. This is especially true with respect to the issue of the Iraq and Afghanistan Wars. In the past, we had traditionally found ways to finance wars via what usually ended up being a combination of higher taxes and short-term debt in the form of war bonds and other means of financing. No such effort was made to do this during the Bush years even though it’s likely that the White House could have made a convincing political argument that we needed to find a way to pay for the war that was necessitated by the September 11th attacks. Instead, President Bush chose to basically let the political capital he had gained in the wake of the attacks and the Republican Party in Congress took the position of Alfred E. Neuman and adopted a “What, me worry?” position when it came to fiscal responsibility.
Now that there’ another Republican in the Oval Office, the GOP is returning to form. The latest budget deal, when combined with the tax plan passed just prior to the holidays in December, guarantee a return to the era of trillion dollar deficits at a time when financial markets are becoming particularly sensitive to fears about increased debt and interest rates. Don’t expect Republicans to do anything about it.
Why should they?
The next Democratic government will be severely hamstrung before it even takes office.
For instance, the next time the US gets hit by a major recession, interest rates might be too high already to pay for another stimulus, showing conclusively that big government doesn’t work.
This is called winning, because it’s “party before country” all the way.
Doug, you forgot to dynamically score the debt. Once that is done it shows the actual debt is falling at speeds approaching terminal velocity.
And this is happening with the economy healthy and interest rates at historic lows. If Trump’s tariffs plunge us into recession and his fiscal idiocy drives up interest rates, we will be in deep deep trouble.
The main reason I voted Republican as long as I did was concern over the debt. Reagan raised taxes multiple times. Bush I raised taxes and cut spending. The GOP Congress worked with Clinton to put us in surplus and worked with Obama to cut the deficit in half. Had Clinton been elected, I have no doubt they’d be sticking to their “fiscal conservative” line and the deficit would be hundreds of billions less than it is now.
Trump is doing to us what he did to all of his business partners: making himself rich and driving us into bankruptcy.
Oh, and with Trump starting trade wars left and right, the current admin is concurrently undemining the position of the dollar as the world’s premier reserve currency, making the US national debt even harder to finance.
Blowing up the national debt while pissing off everyone (China, the EU, Canada) who might normally lend you money doesn’t exactly strike me as a winning economic strategy.
In fact, it would be pretty hard to come up with a better plan to decisively weaken the US if you tried.
@drj: Putin is laughing his ass off.
There should be a “new rule”: anybody talking about the debt/deficit must use % of debt to gdp, as opposed to the big numbers designed to scare people.
Our biggest problem when it comes to deficits is that the Republicans (who control the agenda on this topic even when we had a Democratic President) are perfectly willing to finance wars and tax cuts without paying for them, but when it comes to infrastructure, education and healthcare, these are things we clearly “can’t afford”.
We are leaving a burden to our children alright, but it has nothing (or at least little) to do with how many ones and zeros reside on servers at the Federal Reserve. Money is a man-made (and malleable) concept, that may or may not present problems in the future. But a crumbling infrastructure and a sick, uneducated population will be real burdens on future generations.
Trump quote on the debt from march, 2016:
“We’ve got to get rid of the $19 trillion in debt. … Well, I would say over a period of eight years. And I’ll tell you why.”
Then there was this winner in May, 2017:
Donald Trump is hoping to wipe out the US’s more than $350 billion budget deficit over the next decade by cutting spending on social safety-net programmes by more than $1 trillion.
How the eff can anyone with half a brain support this lying sack of crap?
It should be noted that the US national debt topped $21 trillion back in March – nearly four months ago, prompting Congressional Republicans and Trump to move that month to essentially eliminate the debt ceiling for a year (they didn’t want to be up against that particular battle in an election year, so they just made it temporarily go away).
Since January, the government has added $663,304,845,996.51 billion in new hard external debt, against an increase of just $50,218,441,793.01 in new intragovernmental debt.
Short version: the supposed party of fiscal responsibility has added, on average, $4,251,954,141 of new hard, external debt per day since the beginning of this year.
The country is up to $21.2 trillion now, with no end in sight as supply side economics (once again) proves that it's great at accomplishing one thing – exploding the deficit.
As said, it’s Kansas under Brownback, written nation-wide.
I’m talking to my finances person today to take money off the table and stash it in something liquid. Between Brexit and Trump’s stupidity, I’ll be very surprised if we make it a year down the pipeline without the markets doing a large correction.
@grumpy realist:
Mmhmm. Note well that job creation numbers are ticking down below analyst expectations, while new jobless claims are ticking up. The US is poised for a nasty correction.
Let’s just hope it gets here in time for the midterms. Meanwhile, this market and this moron are a shorter bear’s (me) dream come true.
I disagree with this statement. It’s true that I am not a economist, but there are plenty that would agree with the statement that you really don’t need economic growth to exceed population growth (just do a Google search for “do we need economic growth?” and read one of the many links that come up). And considering I lean towards advocating ZPG, I don’t really think we need economic growth at all.
(That all said, I will allow that very poor countries are benefited by economic growth. But the living standards quickly level off as they approach first world status.)
@Todd:
Exactly.
Really, what matters is the capacity of our economy and our political system to meet our debt service obligations. Unless Republicans indicate otherwise we will continue to meet those obligations.
All of that said, we should know by now what’s coming down the road – a serious Republican campaign to use these oh-so-scary big numbers as a pretext for a roll back of earned benefit programs like Social Security and Medicare. As far as they can see, there are far too many undeserving recipients in those programs.
Doug, you are a cynical man but not nearly cynical enough. Republicans want a balanced budget, but they cannot stomach balancing anything like the current budget. When you think about it, every baby pumped full of milk is really just another bomb that cannot be dropped, or another foot of wall that cannot be built. So first grab that good stuff (i.e. when Republicans control the purse strings), then cut wasteful “entitlements” when times are bad. And when dealing with credulous marks willing to buy this, the panacea of tax cuts is an evergreen easy up-sell in every season. The real beauty is that a constant tone of fear and resentment can be maintained throughout: first directed at foreigners, then at the domestic poor. So please don’t denigrate Republicans by saying that deficits are a ploy: these guys know exactly what they are doing.
Note as well that the first real round of US/China tariffs goes into effect at midnight on Friday (US against China) with Beijing expected to impose (disproportionately targeted at red states) retaliatory tariffs shortly thereafter.
If nothing else, the imminent wailing from red staters – red state farmers in particular – offers the potential for a great deal of schadenfreude.
All but two of those voted for trump.
Huh, our resident Trumpists aren’t out to defend him on this one. It’s almost like there’s a completely radio silence on the Right Wing about the deficit and they don’t have talking points to fall back on.
@teve tory:
Going further, the counties in Illinois and Minnesota which are large soybean producers also overwhelmingly (all but one in Illinois and all of them in Minnesota) voted for Trump.
The crop at this point is something like 93% emergent, so they are locked in. The current price all but assures that the best these farmers can hope for is to break even. The downward pressure on the futures is motivating an increasingly large number of farmers to lock in the price (and the economic impact) now rather than wait amidst worries it’ll continue to nosedive.
Couple that with the knowledge that essentially the only thing propping up equities at the moment is buybacks. Investors themselves are fleeing for the exits – capital outflow at mutual funds, etc. is close to record highs. There’s a limit to how many shares companies can reasonably buy back / how much capital they can devote to doing so, and any effect these stupid tax cuts might have had on capex is essentially non-existent, so start making your plans.
That impact will have ripple effects as well. I suppose that the lesson they’ll learn is “be careful what you vote for”.
This has been another edition of “Imagine if this happened under Obama”.
@Hal_10000:
Oh I’ve certainly heard the talking point. We’ve heard it here at OTB before, albeit not in this particular thread so far. The central talking point about the deficit is, predictably, “Whatabout Obama?”
Or course repugs will do something about the debt. They’ll eliminate social security and medicare while keeping the revenue from the employee contribution of the payroll tax.
Members of Congress only care about deficits and the debt when the other party holds the White House. Republicans are just worse about portraying themselves as fiscally responsible.
@Brian Weigand:
I would disagree with you there. During Obama’s presidency the Democrats put themselves at considerable political risk to make sure the Affordable Care Act reduced the deficit–quite unlike Bush with Medicare D. The thanks they got for these deficit-reduction measures was to be attacked for raising taxes and installing death panels, and the bill was still called “fiscal Armageddon” (in John Boehner’s words)–a laughable and groundless charge that’s since been disproven in the years since Obamacare’s rollout, when (until just this year) the deficit has been progressively shrinking.
The GOP’s stance on the deficit is a mix of fraud and economic illiteracy. They basically define any spending on programs that Dems favor as automatically “exploding the deficit,” they scream at the slightest tax increases (at least the ones enacted by Democrats), and they literally don’t consider tax cuts to “count” as contributors to the deficit, based on the discredited “supply-side” hoax that tax cuts pay for themselves–a claim that they, like Lawrence Kudlow above, simply repeat in the face of a mass of evidence disproving it.
This is not a case of establishment vs. the grassroots, either. Conservative elites say it, the Tea Party says it, the Freedom Caucus says it, Susan Collins says it, Trump says it, and his supporters say it. It is, in fact, one of the most unifying features of today’s GOP. Virtually all of the party’s factions treat an economic crank theory as dogma.
Democrats, on the other hand, are not monolithic on the issue. Many establishment Democrats–including most of the economists who worked for Obama–are hardcore deficit hawks. It’s true that many on the left don’t care about deficits, and liberal economists like Paul Krugman argue that the deficit issue is overblown (but not unimportant). But that’s just the point–the only serious debate about the deficit happens almost entirely within the Democratic Party. I don’t think it’s accurate to say Democrats don’t portray themselves as fiscally responsible. Democratic deficit hawks talk about fiscal responsibility all the time. The main thing that drives common perceptions about the two parties consists of long-outdated frames suggesting that Dems are the party of profligate spending, the GOP the party of having the government tighten its belt–an image the GOP clings to but which is little more than a slogan at this point.
@Kylopod: The ACA “deficit reduction” was smoke and mirrors. It worked in the short term by pushing the difficult stuff back so that they could claim it offered deficit reduction over a ten year window. Even that was unlikely to ever actually happen without bigger tax increases or other spending that they would never vote for.