Debate over debt ceiling grips Washington | How much debt do we have?
In the midst of the latest debt ceiling debate, the Verify team looked at debt over the past forty years to see how it had grown.
WASHINGTON – On Capitol Hill, Democrats and Republicans disagree over a plan to raise the debt ceiling amid a Treasury Department warning that it must be done by early October.
On social networks, lawmakers point to the opposing party as the cause of the increase in debt. The audit team looked at Treasury data to analyze the evolution of debt over the past 40 years.
Based on current projections for FY2021, is debt expected to increase under President Biden? How does this compare to past administrations?
Yes. According to the Congressional Budget Office, the deficit for fiscal 2021, which ends September 30, is expected to be around $ 3 trillion.
Debt has grown dramatically over the past four decades, from less than $ 1 trillion in fiscal 1981 to $ 26.9 trillion in fiscal 2020. GDP has also grown significantly over the course of the year. of this period.
WHAT WE KNOW:
On Capitol Hill, lawmakers are discussing to increase the debt limit, a process that would allow the Treasury to take on more debt. So far, Republicans have refused to offer their support for a bill that would raise the debt ceiling.
The debt limit is defined as a “legal constraint on the amount of money the Treasury can borrow to finance federal operations,” according to the Congressional Research Service.
Josh Bivens, research director at the Economic Policy Institute, said the debt limit is a necessary step in getting into debt, despite the fact that spending and income levels have already been decided by Congress.
“On the one hand, Congress decides on spending and taxes,” he said. “And their decision on spending and taxes leads directly to debt. But then they make this other decision divorced from their decision to tax and spend.”
As the debt ceiling debate continues, both sides are pointing fingers at the cause of such a large debt.
Minority Leader Senator Mitch McConnell said the GOP would not support any effort to raise the debt ceiling, adding that Democrats had “accumulated historic debt.”
On the other side of the debate are Democrats like Majority Leader Senator Chuck Schumer, who pointed out that the debt had increased to trillions of dollars under the Trump administration.
A fiscal year runs from September 30 from one year to the next, which means that it sometimes crosses several presidencies. Below are the debt levels for various milestone years.
- Financial year 1981 (Reagan’s first year): $ 998 billion
- Fiscal year 1988 (last year of Reagan): $ 2.6 trillion
- Fiscal year 1989 (Bush Sr.’s first year): $ 2.9 trillion
- Fiscal year 1992 (last year of Bush Sr.): $ 4.1 trillion
- Fiscal year 1993 (Clinton’s first year): $ 4.4 trillion
- Fiscal year 2000 (Clinton’s last year) $ 5.7 trillion
- Fiscal 2001 (Bush Jr’s first year) $ 5.8 trillion
- Fiscal year 2008 (last year of Bush Jr) 10,000 billion dollars
- Fiscal year 2009 (Obama’s first year): $ 11.9 trillion
- Fiscal year 2016 (Obama’s last year): $ 19.6 trillion
- Fiscal year 2017 (Trump’s first year): $ 20.2 trillion
- FY 2020 (Trump’s last year) $ 26.9 trillion
According to the Congressional Budget Office, this debt is expected to increase further in fiscal 2021. deficit for this year is estimated at around $ 3 trillion, according to the CBO.
These data indicate that debt has exploded in forty years, from less than $ 1,000 billion in fiscal year 1981 to nearly $ 30 trillion in fiscal year 2021.
“We’re here because of past spending by Democrats and Republicans,” American University’s Thomas Kahn said. “And tax cuts under the Republicans.”
Bivens agreed, pointing out that debt has increased across multiple jurisdictions.
“It certainly happened under the presidents of both parties,” he said. “There was a brief period in the late 90s when the debt started to go down. It was sort of a mix of tax increases and spending cuts and a very strong economy, which combined for a period of about four years of debt that actually went down at the end. from the 90s. But other than that, it’s been pretty, perpetually on the rise.
It is important to note that the GDP has also increased dramatically, from just over $ 3 trillion in 1981 to almost $ 21 trillion in 2020. Our experts have also said that debt does not. is not necessarily a bad thing, although as it increases it could mean greater payments to “debt services”.
“You have to pay interest on these loans,” Kahn said. “You have to pay interest on these treasury bills. That interest is called debt servicing. You have to service the growing debt and it’s one of the fastest growing parts of the budget in terms of debt. rate at which it increases. “
Kahn said the federal debt is now “equal to the size of the economy.” In 2020, the GDP of the United States was approximately $ 20.9 trillion.
“This has never happened before,” he said. “And in the long run, it steadily increases. We have a debt problem.
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