Now that President Obama has officially completed his first of two terms in the Oval Office, I thought that it was time for a new look at whether Republicans or Democrat presidents have historically been at the top of the political heap in America when it comes to presiding over deficit spending. Note that for the purposes of this posting, I have used the new debt ceiling of $16.4 trillion for President Obama.
I looked back over the past 52 years at the debt issues that faced the last 10 administrations. For my source material, I took data from the Treasury Direct website and used their very handy monthly search function to examine the debt history for the years and months in question. To ensure that you understand how I used the numbers, I have taken the debt figures for the end of the month of January or, in the case of Presidents Kennedy, Johnson and Nixon, the end of the month of their last month of service.
Here's the chart showing the Presidents in chronological order with the debt (all debt figures in billions of dollars) at the beginning of each President's term, the debt at the end of the term, the amount in nominal dollars by which the debt grew, the total percentage that debt grew over the President's full term and the length of the President's term (in years and months expressed as a decimal):
You’ll notice that I have used a somewhat less familiar accounting term, the compound annual growth rate as shown in this formula:
Now, let’s use the compound annual growth rate and put the Presidents in order from least to greatest CAGR:
Lastly, here is the same data but placed in order of the size of percentage increase in debt from least to greatest:
As it stands now, the Obama Administration has, by a relatively wide margin, the highest nominal debt increase with the debt rising by $5.801 trillion in four years. This compares to “only” $4.916 trillion for the Bush II administration over an eight year period. As I’ve noted before, first place overall for the highest percentage and compound annual growth rate for the debt goes to President Reagan who, in his two terms saw the debt rise by a whopping 189 percent, levels which have not even been approached by more recent Administrations.
If we look at the debt accrued over the first four years of the two-term Nixon, Reagan, Clinton and Bush Administrations we get the following:
If you look at the CAGR column, you can see that the compound annual growth rate of the debt under the current Administration is the second highest of the most recent two-term Presidents and is quite a bit greater than the growth rate for all but the Reagan Administration.
Keeping in mind that debt levels grew at relatively constant annual growth rates under the most recent two-term Administrations, where could Washington's debt level be headed over the next half of the Obama presidency. I have been watching the compound annual growth rate of the debt under the Obama Administration for the past two years and it has steadily remained in the 11.5 percent range, give or take a tenth of a percent. If that trend continues (and there’s no particular reason that it will change unless Congress changes its ways), here’s what the debt will look like by the time January 2017 rolls around:
That’s an overall debt increase of $14.768 trillion over the entire eight year period if we use a consistent compound annual growth rate of 11.50 percent.
It’s my suspicion that something will give long before that level is reached!