A recent story in the National Post by Tristan Hopper highlighted the “utterly unbelievable scale” of current US federal public debt levels. As is always the case, it is useful to get some historical perspective on the evolution of the U.S. federal debt over time – which under President Trump has become the biggest U.S. nominal gross federal debt ever at about 22 trillion dollars. It is also interesting to see how US federal debt levels have varied across assorted administrations over time. Of course, there is always the issue of what metric to use. Nominal debt is really not terribly helpful given changes in the size of the economy, inflation and population of the United States over time. One could adjust for inflation and population and look at real per capita federal
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A recent story in the National Post by Tristan Hopper highlighted the “utterly unbelievable scale” of current US federal public debt levels. As is always the case, it is useful to get some historical perspective on the evolution of the U.S. federal debt over time – which under President Trump has become the biggest U.S. nominal gross federal debt ever at about 22 trillion dollars. It is also interesting to see how US federal debt levels have varied across assorted administrations over time.
Of course, there is always the issue of what metric to use. Nominal debt is really not terribly helpful given changes in the size of the economy, inflation and population of the United States over time. One could adjust for inflation and population and look at real per capita federal debt but again given the changes in the composition of consumer baskets of goods and the construction of price indices, over more than two centuries this raises issues regarding comparability.
As well, one could simply look at a basic measure of the economic burden of debt such as the ratio of the federal debt to GDP. In other words, given the size of the economy at a point in time, what was the size of the US federal debt relative to the economy. I am going to exercise economist’s prerogative and go with this last measure as the basis of comparison of the size of the US public debt over time. The size of the debt relative to the economy is a good measure that is easy to grasp for comparison purposes keeping in mind that over such long time spans, any measure is going to have some issues regarding comparability.
The data for this exercise comes from the resources of EH.NET and FRED. Figure 1 plots the gross U.S. federal debt as a percent of GDP from 1791 to 2018 while Figure 2 works out the average annual gross federal debt to GDP ratio by president and also ranks them from highest to lowest. Note that Grover Cleveland gets two separate mentions as he serves two terms (I-1885 to 1889 & II – 1893 to 1897) separated by Benjamin Harrison. One drawback to this approach of annual averages is that some presidents served longer terms than others and in the case of the current incumbent the term to date with only two years of data is the shortest window of observation.
At the birth of the republic, the United States in 1791 under George Washington had a federal debt to GDP ratio of 36 percent and it fell steadily – with a brief interruption during the War of 1812 – and actually reached 0 in 1834 and stayed at 0 for the next two years growing to 0.2 percent in 1837. The only US President to have the achievement of reaching a zero federal debt to GDP ratio is Andrew Jackson (1829-1837). Martin Van Buren (1837 to 1841) follows Jackson and again begins adding to the debt. However, the debt to GDP ratio stays below 2 percent until 1861 when it starts to rise.
By the end of Abraham Lincoln’s term (1861 -1865) and the end of the US Civil War, the ratio reaches 26 percent and then continues to rise peaking at 31 percent in 1869 under Andrew Johnson (1865-1869) and then starting another decline until a low of 2.4 percent in reached in 1916. America enters the First World War in 1917 and the debt to GDP ratio begins a largely uninterrupted rise (some respite during the 1920s) that reaches a peak of 117 percent in 1946 in the wake of the Great Depression and World War II. There then follows the postwar boom and the debt to GDP ratio falls steadily bottoming out in the period of the late 1970s/early 1980s with the low point reached in 1981 at 30.7 percent. Growth of the debt to GDP ratio then resumes with a brief hiatus during the late 1990s/early 21st century and then continues onwards and upwards to the present where it is estimated at 107 percent at the end of 2018.
Figure 2 does a ranking of US Presidents by average federal debt to GDP ratios during their terms. Well, the largest average presidential federal debt to GDP ratio to date is indeed under Donald Trump coming in for the first two years of his term at an average of 105 percent. At number two is Barack Obama at 97 percent followed by Harry Truman in third spot at about 90 percent. Harry Truman of course inherited the debts of World War II and fights the Korean War but also benefits from the robust early growth of the post war era which is why during his tenure the debt to GDP ratio drops from 117 percent in 1946 to 67 percent in 1953. However, in terms of spot estimates – Harry Truman does have the single highest year at 117 percent.
At fourth and fifth place are George W. Bush (62 percent) and Bill Clinton (60 percent). Sixth place belongs to Dwight Eisenhower (59 percent) followed by seventh place George H.W. Bush (57 percent), eight place Franklin Roosevelt (54 percent), ninth place John F. Kennedy (50 percent) and then tenth place Ronald Reagan (42 percent).
At the other end of the ranking – the bottom ten with the lowest average debt to GDP ratios -are a bevy of largely nineteenth century presidents ranging from William H. Taft (3 percent) who actually served just before World War I - to the lowest of then all – Martin Van Buren (0.4 percent). The nineteenth century was a era of more limited government activity and this carries over to the federal debt to GDP ratio relative to the more activist 20th and 21st centuries. Of course, Martin Van Buren also benefited from Andrew Jackson’s fiscal restraint who at an average of 1.4 percent had the sixth lowest debt to GDP ratio. During Jackson’s tenure, the federal debt to GDP ratio falls from 5 percent to zero.
So, there you have it. Whether measured in nominal dollars or as a share of GDP average over the course of years served, President Trump is presiding over the largest US federal debt ever.