Obama Warns Wall Street On Debt Ceiling

President Obama had some potentially market-moving news for Wall Street.

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Ordinarily, you don’t hear sitting Presidents make comments about the financial markets or the impact that events in Washington might potentially have on those markets. The reason for that is, I think, rather self-evident. Unlike like a pundit on CNBC, Bloomberg, or Fox Business Channel, the comments that a sitting President, or indeed any of the major players in Washington on fiscal and economic policy have the potential are at all times taken very seriously by investors and fund managers who work with billions of dollars in transactions at a time. Statements that people like this make have the potential to “spook” the market and have real implications for investors in the real world, including the millions of Americans who have their retirement savings invested in 401(k) accounts an IRAs. That’s why it struck me as rather unusual to hear President Obama make these statements on CNBC:

Wall Street needs to be genuinely worried about what is going on in Washington, President Barack Obama told CNBC in a White House interview Wednesday.

While gridlock in D.C. is nothing new, “this time I think Wall Street should be concerned,” Obama said.

“When you have a situation in which a faction is willing to default on U.S. obligations, then we are in trouble,” Obama said.

In the interview, Obama expressed his exasperation with the tea party faction of the Republican party, saying that their reflexive hostility to “civil” negotiation threatens not only the functioning of government, but the wider health of the economy.

“I am exasperated with the idea that unless I say that 20 million people, ‘you can’t have health insurance, they will not reopen the government.’ That is irresponsible,” he said.

“If we get into the habit where one party is allowed to extort, … then any president who comes after me we be unable to govern effectively,” Obama said.

“One thing I know that the American people are tired of, and I have to assume businesses are tired of, is this constant governing from crisis to crisis,” Obama said.

Now, there’s a lot that the President says here that I actually tend to agree with. I happen to oppose the PPACA and tend to believe that it’s going to end up causing more problems than it will solve, however I’ve thought it wrong for Republicans to follow the Ted Cruz/Jim DeMint strategy of tying the impossible to achieve goal of defunding and/or delaying implementation of the law, or portions of it, to either keeping the government functioning or making sure that the ability of the government to pay debts and obligations that Congress has already authorized via the debt ceiling. I also agree that this entire crisis has largely been driven by a minority of Senators in the Senate GOP Caucus and a minority of Members of Congress in the House GOP Caucus. Those are facts that I think are rather self-evident.

I suppose what concerns me is the idea of a sitting President giving “warnings” like this to Wall Street, especially on what is arguably the one network that pretty much everyone who pays attention to that part of the world watches on a regular basis. Since the interview was aired after markets closed, it’s hard to say what if any impact the comments  might have on investors. There is some indication based on the futures for various market indexes that investors were listening, but it’s not at all clear that this will last through to the morning, or that it will have any real impact on foreign markets. Nonetheless, the President’s remarks did draw a lot of attention on social media and I wouldn’t be surprised to see them play at least some role in how things proceed on Wall Street in the coming days, although it’s worth noting that the major stock market indexes have generally been trending downward ever since this mess started in mid-September. Ordinarily, Presidents tend to seek to reassure investors, not try to send them into a potential panic.

Of course, there is another side to the argument. While the market has drifted downward over the past two weeks, it’s hardly been in panic mode. Most analysts seem to agree that this is because investors are assuming that, in the end, deals will be reached to resolve the shutdown and the debt ceiling before any real damage is done. It’s not an illogical assumption on their part, because that’s how things have always turned out in Washington. Even the current panicked coverage about bitter divides between the parties is largely identical to what we’ve heard before. So, it’s not illogical for investors to assume that the same thing will happen this time around. Obama seems to be telling them not to be so sure about that. The question is whether he’s giving them practical advice, which I would submit he probably should not be doing as a President speaking to world financial markets, or he’s hoping that market troubles will become leverage he came use against the GOP. Neither one strikes me as something as a President should be doing.

Anyway, here’s one portion interview:

And here’s the complete interview:

FILED UNDER: Barack Obama, Congress, Deficit and Debt, Economics and Business, Health Care, Politicians, US Politics
Doug Mataconis
About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May 2010. Before joining OTB, he wrote at Below The BeltwayThe Liberty Papers, and United Liberty Follow Doug on Twitter | Facebook

Comments

  1. Michael J. Listner says:

    Wow! An objective viewpoint. I’m impressed.

  2. David M says:

    Depends how serious Obama is over not negotiating on the debt ceiling. If he really won’t, and believes the GOP is considering defaulting, maybe speaking up is the right move. I’m not sure the GOP will care about pressure from him directly, but there have to be some on the GOP side that can object to defaulting.

  3. legion says:

    Statements that people like this make have the potential to “spook” the market

    Not quite. This has nothing to do with spooking “the market” or even most investors. This is meant specifically to spook the billionaires who tell the Teahadists what to do. This is meant to remind them that if they can’t control their bastard creations, the US economy is going to tank, and there’s no place those billionaires can hide their funds from a crash that big.

    We’ll see in the next few days if that message actually gets through…

  4. grumpy realist says:

    I think what Obama is saying is: “Look, I’m having to deal with a set of people who are acting like a set of lunatics and I can’t guarantee they’re not going to be trying to pull the same sort of stunts when we get to the debt limit. If you have any way of putting pressure on these idiots so they DON’T do this with the debt limit, I’d be grateful.”

    There are enough economic illiterates in the Teahadists who think that defaulting on the U.S. Debt would be a Good Thing for the country.

    (In the case that they do decide to pull the trigger, I suggest that Obama order that interest on the national debt be paid FIRST (no, no default), and money for social security payments and Medicare be paid out LAST.)

  5. Gustopher says:

    I think the Republicans trying to trigger crisis after crisis with the economy does a lot more to “spook the market” than having our first black President call them out on it…

    Oh, I see, “spook” the market. Very clever.

    (No, no, clearly just an unfortunate word choice…)

  6. mantis says:

    He’s urging Wall Street to put pressure on the GOP to abandon this nonsense and stop letting the radicals run the party, for the good of their business. What’s worse, spooking the markets a bit now and avoiding default or defaulting and doing far, far more damage?

  7. Gold Star for Robot Boy says:

    Everyone who complained that Obama doesn’t use the bully pulpit enough, pay attention because THIS is how you effectively use such a tool: sparingly, and directed at people who can make a difference.

  8. Ron Beasley says:

    The Chamber of Commerce had already told the Republican Party they were not going to get any campaign money. I for one pulled all of my money out of Wall Street a week ago. It’s siting in several savings accounts not making any money but it’s not losing any either. I’m ready to jump back into the market when sanity prevails again. I don’t have a problem with the President calling it like it is.

  9. Matt Bernius says:

    @David M:

    I’m not sure the GOP will care about pressure from him directly, but there have to be some on the GOP side that can object to defaulting.

    The issue here is that we seem to be seeing a fracturing not just in GOP politicians, but within the GOP “base.”

    There has always been a significant portion of the GOP that we can call “Chamber of Commerce/Big Business/Wall Street” types. These are the folks who worked *very hard* to draft Chris Christie in 2012 and later gave their support to Romney. These are the folks that are very important in State-wide and National Elections (perhaps disproportionally so). These are the folks that Obama was addressing on CNBC.

    However there is another significant portion of the base that are the “main street/social con/talk radio” types. And these are the folks who are really leading the current charge. And the thing is, these are the ones who are very important (perhaps disproportionally so) in smaller scale House elections (particularly in less populated districts). And they are also more likely to actually be motivated enough to engage in direct visible action (according to anecdotal reports, House members are getting LOTS of calls from outside their district right now in support of “staying strong.”)

    Part of the current crisis is that, unlike in the past, the interests of these two group are diverging. And in the House (as opposed to the Senate) the latter group arguably wields far more power (especially with the backing of Conservative 501(c)3/4’s) than the prior group.

  10. Bob @ Youngstown says:

    @Ron Beasley:

    I for one pulled all of my money out of Wall Street a week ago

    Well Ron you are about a week ahead of me, I guess I still had some hope for sanity in the House.
    Or if not sanity, at least democracy (vote on the clean CR from the Senate).

    I suspect that there are millions of individual investors and hundreds of pension programs that are poised to pull out and retreat to some safe haven.

    Obama is really telling Wall Street to get set for a wild ride, because he’s only willing to negotiate on the budget. The House is telegraphing that they care more about ObamaCare than the budget.

  11. David M says:

    Raising the debt ceiling is relatively simple bill that could be passed at any time, there’s no reason to debate it, consider it, discuss it or do anything** but pass it and move on to actual work. The fact the GOP haven’t done this yet is a pretty good sign they’re not behaving responsibly, as not defaulting on the debt would seem like a pretty basic part of their job description.

    **It is worth trying to abolish the debt ceiling.

  12. Pharoah Narim says:

    Shorter President Obama: Hide your 401Ks and IRAs! These Whiggers are Ca-Ray-Zeeeee!

  13. Bob @ Youngstown says:

    @ Doug,

    Neither one strikes me as something as a President should be doing

    Sure Doug, I agree .. we shouldn’t expect the President to be honest and forthright. That is just is not what we expect of the President. After all that’s not what we come to expect of most of our politicians. Perhaps he should be impeached for being honest.

  14. James Pearce says:

    @Gustopher:

    I think the Republicans trying to trigger crisis after crisis with the economy does a lot more to “spook the market” than having our first black President call them out on it…

    Amen!

  15. al-Ameda says:

    Thank god Obama did not sugar coat this thing with a “both sides are at fault here” approach. One side is completely responsible for this fiasco, and we know damned well who that is – the Republican Party. and more specifically, the de facto leadership of the House (Eric Cantor) and Senator Ted Cruz).

    Wall Street needed to be told firmly and directly that Republicans are quite willing to leverage the Debt Ceiling Limit into another downgrade in the rating of American bonds, and even to a default – they are that malevolent.

  16. C. Clavin says:

    Damn…the President is being open and upfront…WTF…we can’t have that.
    It will completely lay to waste Doug’s Both Sides wet dreams.

  17. grumpy realist says:

    You know, Doug–for someone who claims to be libertarian, you have a distressingly naive view of how the financial markets work..

    …oh, right…nebbermind.

  18. C. Clavin says:

    Why are Republicans so afraid of an up or down vote?
    Seems pretty simple.
    If they had balls…conviction in their stand…they’d put it up to a vote.
    No balls…no conviction in their rigid ideology.
    Can anyone make a cogent argument that Republicans aren’t pu$$ies?
    Cowards?

  19. C. Clavin says:

    I forgot…and losers…

  20. Woody says:

    I understand the apprehension over the President’s direct remarks to Wall Street. However:

    Even the current panicked coverage about bitter divides between the parties is largely identical to what we’ve heard before.

    isn’t quite the case (except for the “Chuck” Todds, of course). This is an intraparty crackup with roots in gerrymandered districting, Bircher billionaires, the absence of earmarks to reward Members, and a media cocoon that is unprecedented in scope and effectiveness. This critter is something very new.

    This directly links to something that was preposterous in previous decades: a debt default. And who better to understand the implications of a default than Wall Street? Even the dimmest American knows Wall Street nearly always favor the GOP – and only an intraparty power has any chance of halting the zealots before genuine disaster.

  21. JKB says:

    Seems like a foolish move to me. If the stock crash, Obama gets blamed. If they don’t, then everyone knows that the investors pay little attention to Obama.

    Personally, he offered nothing not already known so only his “activist” attempt to spook the market was new. Someone should look at who is short on stocks tomorrow/the rest of the week.

  22. C. Clavin says:

    Seems like a foolish move to me.

    Well that pretty much endorses it as a brilliant idea.

  23. David M says:

    @JKB:

    There’s no risk for Obama. Either the GOP agrees to raise the debt ceiling or they don’t. If they do, then this speech worked. If they don’t, at least he tried to put some pressure on them and prevent the financial damage.

  24. becca says:

    @Woody: pitch perfect, my friend.

  25. john personna says:

    @JKB:

    So your expectation is that Wall Street will lose a few billion, blame Obama, and be good …

    because they are in it for the blame.

  26. Midwestern Dad says:

    It seems to me that the President stated some fairly obvious facts. You seem to agree with that. If they come to pass and the market tanks; he can correctly say that he warned people and lay the blame on the republicans in general and the right wing specifically. If they don’t occur; its good for everybody. If a president shouldn’t do this in general; Obama is not commenting on the market on a daily; monthly or yearly basis but instead in a unique unprecended situation. I approve of his actions.

  27. Jeremy R says:

    @Doug:

    The question is whether he’s giving them practical advice, which I would submit he probably should not be doing as a President speaking to world financial markets, or he’s hoping that market troubles will become leverage he came use against the GOP.

    This is just stupid. Why would the markets react any more negatively to that statement than to earlier in the interview where he stresses he’s absolutely not going to negotiate over a gov’t shutdown and debt default? They both signal the same thing, which is he’s refusing to pay the ransom, so the ball is in this guy’s court now:

    https://twitter.com/jonkarl/status/385540058339897344

    As he left the White House, I asked @SpeakerBoehner if there will be a default — no answer.

    And all he has to do is pick between allowing his body of congress to work it’s majoritarian will, or inflicting totally pointless, permanent harm on his country:

    http://www.huffingtonpost.com/2013/10/01/house-republicans-clean-cr_n_4024755.html

    In the hours since the government shut down, House Republicans have slowly but steadily been coming forward to say they’re ready to pass a bill to fund the government with no strings attached.

    As of Wednesday afternoon, the number of those Republicans hit 20 — surpassing the magic 17 votes needed to pass a clean funding bill if all 200 Democrats stick together and team up with them. Of course, House Speaker John Boehner (R-Ohio) would have to be willing to put that bill on the floor in the first place. But if he did, the votes appear to be there for passage, at which point the bill would sail through the Senate and be signed by President Barack Obama, ending the shutdown.

    Tough call…

  28. Jeremy R says:

    I was bouncing around conservative media and saw this:

    http://washingtonexaminer.com/gop-stands-firm-against-funding-bill-will-link-to-debt-ceiling-fight/article/2536750

    “This is not just about Obamacare anymore,” centrist Rep. Michael Grimm, R-N.Y., said.

    “We’re not going to be disrespected,” conservative Rep. Marlin Stutzman, R-Ind., added. “We have to get something out of this. And I don’t know what that even is.

  29. al-Ameda says:

    @JKB:

    Personally, he offered nothing not already known so only his “activist” attempt to spook the market was new. Someone should look at who is short on stocks tomorrow/the rest of the week.

    “Spook the market”? What do you think Republicans are doing right now? The caused a downgrade in the rating of American government bonds 2 years ago, and they’re causing the market to decline right now, and the next downgrade and forfeiture is looming. Thank you GOP.

  30. Jenos Idanian #13 says:

    Shorter Obama: “Hey, remember back in 2011, when I agreed to the 16.7 trillion debt ceiling? You all should have known that my promises have expiration dates, and that one is way overdue. So I want to jack it up again. I don’t know how much, but whatever it is, when we hit it, I’ll want more.”

    One lesson Obama never learned, and seems incapable of ever learning:

    Something that can’t go on forever, won’t. Debts that can’t be repaid, won’t be.Promises that can’t be kept, won’t be.

  31. James Young says:

    Perhaps someone can explain how it is that some are talking about “defaulting on the debt.” As I understand it, we are talking about no such thing, and President Barry is (as usual) lying. There is more than enough money in current revenues to pay interest on the debt. What President Barry is apparently misrepresenting as “defaulting on the debt” is actually not paying for various socialist welfare programs, a lower priority item than interest on the debt. Perhaps the President has the power to give priority to current spending over interest on the debt. To do so, however, would be HIS choice, and the responsibility for the consequences of doing so would be his alone.

  32. Matt Bernius says:

    @Jeremy R:

    “We’re not going to be disrespected,” conservative Rep. Marlin Stutzman, R-Ind., added. “We have to get something out of this. And I don’t know what that even is.”

    This sentiment demonstrates why I expect we are in for a long haul and — unfortunately — a failure to raise the debt ceiling. The fact is that enough Republicans want something substantive in order to be able to call this a win. And what they want is something that the Democrats cannot give. There is no face saving path that will satisfy the Republicans who are out for blood.

    And the Republicans who are out for blood believe as a matter of faith that (a) the Government shut down is the next best thing to drowning it in a bathtub, and (b) that nothing of significance will happen if the debt limit is not raised.

  33. Grewgills says:

    @Matt Bernius:

    and (b) that nothing of significance will happen if the debt limit is not raised.

    That is an awful lot of willful ignorance.

  34. David M says:

    @Grewgills:

    See the earlier responses, there is a sizable portion of the GOP base that is detached from reality. And for some unknown reason, the GOP cares what they think.

  35. anjin-san says:

    Shorter Jenos

    “I am too ignorant to know that Congress raised the debt ceiling 18 times for conservative icon Ronald Reagan, and that raising the debt ceiling is a completely normal process for our government.”

  36. Jeremy R says:

    @Matt Bernius:

    Republicans who are out for blood believe as a matter of faith that (a) the Government shut down is the next best thing to drowning it in a bathtub, and (b) that nothing of significance will happen if the debt limit is not raised.

    Don’t forget “c) Debt default will cripple the economy, and by the time the elections come around the public will have forgotten they’re pissed with us and the bad economy will just hurt the party in power.”

    From Krauthammer on the Fox Panel tonight:

    During his appearance on Special Report, Krauthammer said that the effect of the government shutdown will be practically unfelt on the economy, but the real threat to President Obama is the possibility of the federal government’s hitting its borrowing limit.

    “The debt ceiling is a threat even though the blame will go to Republicans,” Krauthammer said. “It’ll have a profound effect on the economy and that will stay with him long after people have forgotten the event. And he can’t afford an economy that continues as anemically as it is right now.”

  37. James Pearce says:

    “We’re not going to be disrespected,” conservative Rep. Marlin Stutzman, R-Ind., added. “We have to get something out of this. And I don’t know what that even is.”

    How about a new Speaker of the House? Would that make ya happy, Marlin?

  38. anjin-san says:

    Republican majorities voted to raise the U.S. debt ceiling seven times

    It was fine for Bush. It was fine for Reagan.

    But its different for our current President. When he needs the same routine vote all those other Presidents had, its… uppity.

  39. anjin-san says:

    @ James Pearce

    How about a new Speaker of the House?

    Well, Boehner can’t comment on this. He has a something of Eric Cantor’s in his mouth at the moment.

  40. Pharoah Narim says:

    @James Young: “As I understand it…..” Stop right there. Go get some more understanding then come back if you wish to broaden you viewpoint. I don’t want to make snap judgements but you’re coming off as a bomb thrower…emotionally more invested in who looks bad and takes blame rather than problem solving. Your understanding seems to be formulated from the commentary of radio/Tv/blog hosts….the LAST people that should be consulted as authorities on the matter. An industrious internet search will yield resources from people whose primary goal is not to sell ad time or space and who ARE experts in the field. If you canvas enough of them….you’ll have a fairly decent opinion about how a debt default might go down. What no expert with peer credibility says is that NOTHING WILL HAPPEN.

  41. OzarkHillbilly says:

    @Jenos Idanian #13:

    Shorter Obama: “Hey, remember back in 2011, when I agreed to the 16.7 trillion debt ceiling?

    Shorter Janus: “Hey, I’m really stupid!”

    Listen jack*ss, the President does not set the spending. Congress does. Congress is the one that blew through the debt ceiling. If you do not know the most basic parts of American governance, maybe you should just crawl back into Rupert Murdoch’s *ss.

  42. James Pearce says:

    @anjin-san:

    He has a something of Eric Cantor’s in his mouth at the moment.

    I get the joke, but have to ask: Was that really necessary?

  43. Jenos Idanian #13 says:

    “The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a Sign that the US Government cannot pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies. …Increasing America’s debt weakens us domestically and internationally. Leadership means that ‘the buck stops here’. Instead, Washington is shifting the burden of bad choices today onto the backs of our children and Grandchildren. America has a debt problem and a failure of leadership. Americans deserve better.”

    So, just how much debt is enough? What, exactly, should we do about it? Jack it up, spend until we hit it, then jack it up again? At what point do we owe as much as we can possibly bear, and actually start paying it down? How much debt do we shackle future generations to have to pay back?

    Or, maybe, we hit a certain point where we realize we can’t pay off the debt and tell our creditors to go screw? Do we pull the old “you effed up, you trusted us!” routine?

    It’s so telling how people here will do anything to actually avoid addressing that issue, and think that if they throw up enough meaningless crap, it’ll go away. For example — Reagan? He left office almost 25 years ago, when the Cold War was still (barely) going and the total federal debt was just under $3 trillion. Under Obama, it went from just under $11 trillion to just under $17 trillion.

    In other words, in just over four years, Obama’s added almost twice the money to the federal debt that Reagan oversaw.

    But again, a diversion. An excuse to shoot at the messenger to shut up the message. And I repeat: how much debt is enough? $19 trillion? $20 trillion? $25 trillion? $Eleventy zillion?

    Here’s one final thought: the people we’re enslaving to our insane borrowing will be the ones who choose our care when we’re old. The only reason they won’t dump us at the local racetrack is that they won’t be able to afford the cars to drive us there.

  44. Jenos Idanian #13 says:

    @James Pearce: I get the joke, but have to ask: Was that really necessary?

    For him? Yeah, it was. Say what you want about Annie, he knows his limitations. When he can’t say anything else, he goes for the vulgar and crass. And he’s gotten good at it. Not surprising, as he’s had plenty of practice.

    And James, you’re in the minority in your opinion. Two “helpful” updings, zero downvotes. Vox populi and all that.

  45. sickademboth says:

    Excellent article. Thanks for showing the errors of both sides. Objectivity in journalism–what a concept, maybe they should teach it in school or something.

  46. grumpy realist says:

    @James Young: That’s why I said above that if we do come up against the limit, any money coming in should go to paying the interest on the debt (see? No default) and the rest of the government bills paid off in order of importance. Anything that isn’t an actual promise (social security and medicare) should be dead last.

    Considering that a sizable percentage of Teahadists are the “keep government hands off my Medicare”, this is the only strategy I can think of that will make them realize we’re all in this together. They’re going to have to feel actual pain before they stop horsing around.

    Oh, and by the way, there are quite enough idiots on your side who are saying that “a default wouldn’t be that bad” that I have no doubt that’s one of their strategies as well. Be careful of what you ask for.

  47. James Pearce says:

    @Jenos Idanian #13:

    When he can’t say anything else, he goes for the vulgar and crass.

    I can handle vulgar and crass and am not entirely humorless. But once we start talking about dicks, it’s only a matter of time someone’s going to dip into the old “Eff off” well again….

    As to your questions:

    So, just how much debt is enough? What, exactly, should we do about it? Jack it up, spend until we hit it, then jack it up again? At what point do we owe as much as we can possibly bear, and actually start paying it down? How much debt do we shackle future generations to have to pay back?

    Dave Weigel provides an answer:

    You don’t hear Republicans lulz-ing at Obama for failing to “cut the deficit in half in my first four years,” because he basically did this, albeit in four and a half. (Snip)

    But Americans, by a 19-point margin, disapprove of how the president is “handling” this. As has been true for generations, Americans don’t actually know what the deficit is, conflate it with “debt,” conflate it with the economy being rotten.

    Indeed, when you say things like:

    In other words, in just over four years, Obama’s added almost twice the money to the federal debt that Reagan oversaw.

    You’re kinda proving his point….

  48. anjin-san says:

    @ Jenos

    Say what you want about Annie

    There is a convention among adults that we refer to other adults in the manner in which they have chosen. You repeatedly refer to me, and others, by cute little nicknames you have made up – something most of us were over by the age of 16.

    Sorry dude, you have disqualified yourself from any discussion about what is appropiate conversation between adults. Grow up, and get back to us.

    the vulgar and crass

    Sorry dude, but some of us remember your bizarre, multi-day rant about “finger banging 14 year old girls in public bathrooms” during the discussion of the Kaitlyn Hunt affair – you remember that one don’t you? When you literally could not help repeating that phrase over and over (and over) even after you had been called on it repeatedly.

    Try actually showing some class from time to time. Then you will be taken seriously in a discussion about class or the lack thereof.

  49. anjin-san says:

    @ James Pearce

    Was that really necessary?

    Necessary? Of course not. But I sometimes use OTB as a place to blow off steam when I am redlining over an event in the political realm. If I am going to pop off, better to do it here than on Facebook or around the water cooler at the office.

  50. Grewgills says:

    @Jenos Idanian #13:
    Others have effectively answered the rest.

    In other words, in just over four years, Obama’s added almost twice the money to the federal debt that Reagan oversaw.

    Of course with the annual inflation rate averaging about 2.8% from then to now, a dollar in 1988 had the buying power of $1.99 today. That also ignores other confounding factors, such as a Congress that agreed to increase taxation to bring in more revenue under Reagan and a Congress that intentionally downgraded the credit rating of the US under Obama leading to higher debt interest. It also ignores starting points and the percent increase of the national debt. Reagan blows the doors off Obama on that front (nearly tripling the debt). Bush 43, went from a budget surplus to deficits that nearly doubled the debt, going from a projected nearly 5 trillion surplus to over a 5 trillion dollar deficit. Deficits have been dropping under Obama, as they tend to under Democratic presidencies.