Who Is More Responsible for the U.S. Debt?

For today’s post I wanted to review the evidence for that oft talked about issue: who is more responsible for the U.S. debt?  If you ask a Republican it is “tax and spend” liberals that are responsible for the bulk of the U.S. government debt.  But if you talk with Democrats they ardently disagree.  So who is right?

Well, like all things, it turns out that there are lots of ways to look at the data to answer the question.  However, I will discuss my conclusion below.  Let’s look at various methods for answering this question.  You can download the What My Intuition Tells Me Now U.S. Budgetary Data spreadsheet to see my sources and calculations.

Method 1: Absolute Debt Levels 1934-2010

The first method is very straight forward, let’s just look at how much debt, since 1934 has been accumulated by Democrats vs. Republicans by their collective inability to balance a budget.  This is just the total amount of budget deficits and does not include the mounting interest on the debt which has contributed so much more to the total debt situation.  But neither party is responsible for the independent movements of interest rates, so let’s just look at the thing they could control: the budget.

Total debt accumulated by budget deficits: $8,010,718,000,000; or $8.0 trillion

Total debt accumulated by Republicans:      $4,504,768,000,000; or $4.5 trillion; or 56.2%

Total debt accumulated by Democrats:         $3,505,950,000,000; or $3.5 trillion; or 43.8%

Source: Office of Management and Budget and “What My Intuition Tells Me Now Blog.”

Unequivocally, on an absolute basis Republicans are much more responsible for the accumulated debt of the United States compared to Democrats.

There is a lot of talk amongst Republicans that President Barack Obama is out of control with his spending.  How has he done?  Obama’s administration alone is responsible for $2,706,177,000,000, or 33.8% of total, accumulated budget deficit!

Democrats will argue that we should put aside the fact that he inherited overwhelmingly the worst economic catastrophe since the Great Depression, as well as the Bush-enacted TARP bailout package for banks.

I would counter Obama supporters that he could have ended all of those economic stimulus packages if his priority were a more fiscally sound economy.  Someone might, in turn, counter that there would be no economy at all if he hadn’t pumped so much stimulus into the economy.  We could debate endlessly, but the fact is that Obama is responsible for 33.8% of the total accumulated debt since 1934.

But Republicans shouldn’t celebrate, since even with Obama’s data included, they are still responsible for 56.2% of the total debt 1934-2010.  In fact, if Obama is removed from the equation, the total accumulated budget deficits figure is: $5,304,541,000,000; and Republicans are responsible for 84.9% of that figure.  Ouch!

These absolute figures have been bandied about by liberal folk, like Bill Maher, for example.  But wait, there’s more to the story…

I have to defend the Republicans because a disproportionate number of them have held the presidency in the later years between 1934-2010.  In fact, since 1968, Johnson’s last year in office, Republicans have held the office for 28 of the 42 years.  Because the economy is much larger now than it was in the early years of that 78 year period, any debt that they ring up in more modern dollars will be larger than debt rung up in the 1930s.

Method 2: Relative Budget Deficit Levels 1934-2010

What is needed, to eliminate the problem I just described is to look at debt on a relative basis.  That is, compare total budget deficit to total gross domestic product (GDP) for Republicans and Democrats.

Average budget deficit as % of GDP:                             3.2%

Average budget deficit as % of GDP, Republicans: 2.3%

Average budget deficit as % of GDP, Democrats:    3.9%

So by this measure, Democrats are the bigger spenders, and by a large margin: 69.6% = 3.9% ÷ 2.3% – 1.  Sorry Democrats, but even if you take Barack Obama out of the mix, the percentage of deficit spending only goes to 3.6%.

In large part, the Democrats numbers look so high because of the massive budget deficits run in World War II.  So you could argue that World War II ought to be taken out of the equation where the average budget deficit was a whopping 22.2% of GDP.  I am guessing that Republicans and Democrats would agree that World War II was worth fighting and that it wasn’t an optional fight.

If you take out World War II, then you see that Democrats, on average run only a 1.9% budget deficit vs. 2.3% for Republicans.  I know what Republicans are thinking: if you take out World War II then you have to take out the post-September 11, 2001 deficits for Bush.  Okay, when I do that, Democrats (ex. World War II) have average budget deficits of 1.9%, compared to Republicans at 2.4%.

Okay, another objection, this time raised by Democrats is that in the 78 year period dating back to 1934, that Democrats have held the office of the U.S. presidency for 41 years, as compared to Republicans only holding office for 37 years.

Method 3: Average Deficit Levels Per Year 1934-2010

What we need to rectify the just described situation is an average deficit level per year in office for Republicans and Democrats.  Here are the results:

Total of Deficits Run       ÷  # Years in Office            =           Average Deficit Per Year

Total U.S.       $8,010,718,000,000    ÷               78                           =          $102,702,000,000

Republicans  $4,504,768,000,000   ÷                37                           =          $121,750,000,000

Democrats     $3,505,950,000,000   ÷                41                            =          $85,511,000,000

Intermediate Conclusion:

By just about any measure, Republicans are actually the more fiscally irresponsible party.  The only way that Democrats look worse is if you include the expenses of World War II in the picture and you only then make relative comparisons, such as comparing budget deficits to GDP.

But even when you include the costs of World War II on an absolute basis, the very first measure up above, Democrats still are only responsible for 43.8% of total accumulated budget deficits from 1934-2010, and they have been in office for four years longer.

Frankly, Republicans, from a budgetary argument perspective, ought to count their lucky stars that World War II happened on a Democrat’s watch.  They also ought to be thankful that the Great Recession happened in the last year of the most recent Republican president.  Were it not for these two coincidences, they would have no fiscal platform at all.

The raw data I have provided over the last three days have demonstrated the following facts:

• Taxes are historically low,
• Tax policy has no long-term affect on the economy, and
• Republicans are more responsible for the debt situation than Democrats

Conclusion:

Regardless of previous political platforms and historical data, what matters right now is NOW.  Both Republicans and Democrats need to find an accord.  This is another way of saying they have to stop being Republicans and Democrats and start being Americans.

Jason