Washington and its Chronic Overspending Problem

With Congress perpetually dealing with an extension to the debt ceiling, I realized that I had not updated my posting on the debt accrued by Washington over the past 11 administrations, going back to the Kennedy Administration in January 1961.  In this posting, I will provide my readers with data showing the nominal increase in the debt for each administration, the percentage increase in the debt and the compounded annual growth rate or CAGR of the debt during the period of time that each of the last eleven presidents has occupied the Oval Office.

I have sourced my data from the Treasury Department’s Debt to the Penny website which you can find here.  The Debt to the Penny website provides us with a daily debt update, allowing interested persons the ability to search the debt on a certain day, in my case, I have used the inauguration date as the starting date for each president and the day prior to the inauguration day as the end of the presidential term in office.  In the case of the Kennedy, Johnson, Nixon and Ford Administrations where their terms in office started or ended in mid-month, I have used the debt data for the end of the last month that they were in office as an ending point and starting point for their successor.  As well, you should note that my debt data includes both external marketable debt and intragovernmental debt, that is, the debt that the federal government owes to itself for borrowing from one trust fund to cover government expenses.  Here is the most recent breakdown of the two types of debt:

As well, I should explain the concept of compounded annual growth rate or CAGR.  By using the compounded annual growth rate rather than just using an average growth rate, we remove the impact of a drop in the value of a dollar over the 57 years from the beginning of the Kennedy Administration to the current Trump Administration.  For example, according to the Bureau of Labor Statistics CPI Inflation Calculator that you can find here, one dollar in January 1961 has the same purchasing power as $8.27 in December 2017.  This means that when the Kennedy Administration added $1 to the federal debt, it was roughly equivalent to the Obama Administration adding $8.27.  As such, here is the formula that I have used to calculate the compounded annual growth rate of the federal debt:

With that background, let’s look at the statistics starting with a table showing the raw debt data for each of the last eleven administrations:

Here is a bar graph showing the nominal increase in the federal debt for each administration (in billions of dollars):

As you can see, the Obama Administration is, by a very wide margin, responsible for the greatest growth in the nominal federal debt. 

Here is a graph showing how, over the last two administrations, the federal debt began to grow nearly exponentially:

Here is a bar graph showing the percentage increase in the federal debt for each administration:

While the Obama Administration was responsible for the greatest nominal growth in the federal debt, the Reagan Administration was responsible for the highest growth rate in the nominal debt.

Lastly, here is a bar graph showing the compounded annual growth rate in the federal debt for each of the last eleven administration:

Once again, the Reagan Administration was responsible for the highest compounded annual growth rate of the federal debt following by the Ford, Bush I and Carter Administrations.  When measured using the compounded annual growth rate, the Obama Administration comes in fifth place, well behind the Ford, Reagan and Bush I Administrations.

Since 1917, the Second Liberty Bond Act placed an aggregate limit on federal debt as well as limits on specific debt issues with a general limit placed in 1939.  Let’s close this posting with a look at how many times Washington has extended the debt ceiling between 1993 and 2014:

In addition, since 2014, Congress has increased or suspended the debt limit as follows:

March 2015 – $18.1 trillion

November 2015 – suspended statutory debt limit to March 15, 2017

March 2017 – $19.8 trillion

September 2017 – suspended statutory debt limit to December 8, 2017

It is interesting to see how Congress can suspend laws when it suits their own best interests, isn’t it?

As you know only too well, the new debt ceiling is just the next debt floor since Washington has no incentive to control its spending or pay back any of the $20 trillion in accrued debt, instead it is always easiest just to kick the “debt can” further down the road.  The greatest danger is that, as interest rates begin to grind upwards, servicing the debt will become increasingly difficult since Washington is currently living in a debt interest “Wonderland”. At some point in time, American taxpayers will find that they are paying more taxes to cover the interest owing on the debt than they are paying to cover the cost of their entitlement programs.

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