US President & Rising Debt Limit, Who To Blame?

In my post on Tue, 02 May 2023 (click here to read ! and give a “Like”), I have shared my worries about US debt limit impasse may further weaken US stock market, that is still reeling from the US regional bank crisis contagion.

US Debt clock

Above is the latest snapshot of US debt clock:

• Figures in “red” represent expenses / money spent.

• Figures in “green” represent revenue / money received.

• So many red items and so few greens !

Latest Development:

• President Biden has invited Republican House Speaker Kevin McCarthy to meet at the White House on Tue, 9 May 2023.

• This will be the first meeting between the two leaders to discuss the issue since it first surfaced on 13 Jan 2023 when US Treasury Secretary, Ms Janet Yellen sent the initial letter to inform Congress.

• In addition, President Biden also extended invitations to (a) House Democratic leader Hakeem Jeffries, (b) Senate Majority Leader Chuck Schumer and (c) Republican leader Mitch McConnell.

• A White House official said President Biden would "stress that Congress must take action to avoid default without conditions" on 9 May.

Assessing the situation was the Bipartisan Policy Center’s Budget Analyst Shai Akabas.

He feels that:

• The short deadline underscored an urgency to find a solution to the bitter standoff.

• The time constraint also dashed hopes that Congress could negotiate through the summer months.

• A potential default within weeks "is not befitting of US, a country considered the bedrock of the financial system.

• What makes it worse is that a potential default will only fuel uncertainty to an already shaky US economy, forecasted to slip into recession in H2 2023.

With the US Congress set to meet this week, it will be a cat and mouse game in the making.

Nothing commoners like us could do except to relax, get comfy, sit back and watch the event unfold before our very eyes.

On a lighter note

As a result of my previous post, I have become very curious to find out which US presidents have been “responsible” for running US “deeper” into debt and without the need to be “accountable” (a concept very foreign to me)?

You will be surprised with my findings.

The method used is a simple and straight forward calculation:

• Calculate (yearly) Budget deficit = (Govt revenue - Govt spending).

• Add yearly Budget deficit to “National debt”, that is total amount of money that the govt owes to its creditors.

• Each president’s final deficit = (Debt level when president left office) - (Debt level when president assumed office).

The Big Reveal !

Top 4 US presidents (based on descending amount) are:

(1) Barack Obama: Democrat - $8.60 Trillion after 8 years in office (2 office terms).

• Above deficit amount represented a +74% increase from the $10.63 Trillion debt level when he was in office from 2009 to 2017.

• Budget spent on fighting the Great Recession with an economic stimulus package and tax cuts.

• Remaining budget was spent on the Affordable Care Act.

(2) Donald Trump: Republican - $8.18 Trillion after 4 years in office.

• Above deficit amount represented a +40% increase from the $19.95 Trillion debt level when he was in office from 2017 to 2021.

• He enacted the Tax Cuts and Jobs Act, which reduced revenue and drove up debt directly.

• He has also increased spending on (i) Defense (ii) Veterans and (iii) Coronavirus relief.

** Little Irony : Ex-president Trump managed to “burn” $8.18 Trillion in a short span of 4 years. Amongst the “mentioned’ presidents in this post, he is the only “businessman” by profession.

(3) George W. Bush: Republican - $5.85 Trillion after 8 years in office.

• Above deficit amount represented a +101% increase from the $5.8 trillion debt level when he was in office from 2001 to 2009.

• His budget was used to launch “War on Terror” that included military operations in Afghanistan and Iraq. Still recall his “axis of evil” and “weapons of mass destruction” accusation of Iraq?

• Additionally, it was used to fund the (a) signed “Economic Growth and Tax Relief Reconciliation Act” and (b) the Medicare Prescription Drug, Improvement, and Modernization Act.

(4) Joe Biden: Democrat - $2.50 Trillion (as of Sep 2022) after 1 year 9 months in office.

• Above deficit represented a +8.8% increase from $27.75 Trillion while still in office (2021 till present)

• His budget was used to fund the American Rescue Plan Act, which provided $1.9 Trillion on Pandemic relief & Economic recovery.

It is very likely that President Biden will topple Mr Obama as the biggest debt creator given US continuous weaponry support to Ukraine in its war with Russia that (a) is still going strong after 14 months and (b) shows no sign of stopping.

• Do you think it is “normal” not to keep your books / budget balance?

• Do you think United States is drowning in its debt pool?

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