As background, when Obama took office in January 2009, the national debt stood at $10.6 trillion.
When he left office in January 2017, it had nearly doubled to just shy of $20 trillion, according to the Treasury Department.
The total debt added was about $9.3 trillion.
Many in the media are decrying the fact that the current deficit under Trump will hit or approach $1 trillion for the 2019 fiscal year (up from $779 billion in 2018), but a very important statistic to consider is the deficit to gross domestic product ratio.
This essentially measures the wealth of the nation in relation to its potential ability to service its deficit spending.
This ratio during the Obama years averaged about 5.75 percent of GDP, while so far under Trump the figure has dropped to 4 percent.
One of the reasons for this is that GDP has expanded significantly under Trump, from $18.7 trillion during Obama’s last year in office to an estimated $21 trillion for the current fiscal year.
That’s over a 10 percent increase in the overall size of the economy in just a little over two years.
The GDP grew at 1.5 percent during Obama’s last year in office, but doubled to 3 percent in 2018 under Trump.
Global financier Conrad Black compared Trump’s numbers favorably to Obama.
“It is true that the deficit tops $1 trillion and that is not sustainable indefinitely, but that is 35 percent less than the Obama average (admittedly coming after a debacle bequeathed by George W. Bush) and the GDP is about 25 percent above the latter Obama years,” Black wrote this week for American Greatness.
“So despite a very large tax reduction and a strong defense build-up, the deficit as a percentage of GDP has shrunk,” he added.
Black further contended, “[T]here are no serious signs of incipient recession.”
The Congressional Budget Office shares this assessment.
Its experts believe growth will slow, but a recession is not in sight.
It should also be noted that tax revenues are up 3 percent for fiscal year 2019. So the GOP tax cuts are not the cause of the current deficits.
The economic growth spurred by the 2017 tax cuts has created a jobs boom not seen in the country since the late 1960s, not surprisingly following tax cuts championed by President John Kennedy earlier in the decade.
The booming economy is a double win: Millions more Americans are paying taxes and not drawing as much on the federal coffers.
A returned to large deficits was anticipated well before Obama ever left office due primarily to federal entitlement programs.
During Obama’s second term in 2014, the CBO forecasted $7.6 trillion in deficits from 2015 to 2024, or an average of $760 billion per year.
The deficit in 2014 was $483 billion, meaning the CBO was anticipating a steep increase in revenue shortfalls over the decade, likely topping a trillion dollars per year.
But the current president’s economic policies are working.
While the deficit numbers are nothing to shrug off, Trump is doing far better than his predecessor in reawakening the nation’s industrial might and with it, the opportunity to get our fiscal house back in order.
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