I thought I would expand on some of the statistics I’ve been throwing around here and on The Crawdad Hole. First, the terms. I am using the National Debt figures provided by the US Treasury over the course of the last 60 years. The following is a graph of the national debt by year.
The figure I’ve chosen to use this week is something I call annualized debt increase. Basically, I take the amount of debt increase over a period of time, then calculate the percentage rate over the period compounded annually that would lead to that increase. It’s not dissimilar from averaging the actual percent increase in the debt over each year of a time period. For reference, here is a graph of the increase in debt in a one-year period for each year.
I don’t use the deficit because that number is variable. Just because there’s no deficit one year doesn’t make much difference to our long-term outlook. We pay 4.5% of our GDP in debt interest alone when the debt is 100% of GDP and the deficit has no impact on that.
So it turns out that for the last 60 years, the debt has increased by an annual 7%. The debt first blew past a 10% increase in 1975. The increase in debt went to an all-time high of 20.6% in 1983. High deficit spending basically coincides with the Cold War. It didn’t fall until the Berlin Wall did in 1991.
Who’s the biggest debtor president? If you said Reagan, you might be right. But for now, it’s Obama. In his two years, the debt has increased 35%, or about 16.5% per year. In Reagan’s 8 years, the average was 14%. How about that huge spender George W. Bush? Well his increases were a comparatively paltry 7.5% annually. Clinton fared the best of the last 30 years with 4.5%, except that it was closer to 6.5% in his first term.
Large debts are a trend, not a political fault. Democratic President Carter had a one-term annualized 10% increase in the debt. The sustained trend began in 2002 with the start of the War on Terror. At the same time, President Johnson only increased the debt an annualized 3% after starting a foreign war and a War on Poverty.
The last time the debt decreased was 1957. Since then, the debt has increased 4900% in the 53 years since. In another 53 years, it will be $666 trillion and the interest will be greater that twice the current GDP.