The U.S. national debt has ballooned under the administration of President Donald Trump, increasing by nearly $7 trillion in less than four years.
Trump took office in January 2017 after promising to eliminate the national debt during his presidency. When he took the presidential oath, the national debt stood at about $19.95 trillion. As of August of this year, the national debt was estimated to stand at about $26.73 trillion—an increase of about $6.78 trillion during Trump’s tenure and a drastically different result from what the president promised.
While trillions of dollars have been added to the national debt over the past few months due to massive financial stimulus spending to address the economic fallout of the coronavirus pandemic, economists point out that the debt was already increasing significantly prior to the COVID-19 outbreak. Before the pandemic, the debt had increased to more than $23 trillion in January. This occurred despite strong economic growth during Trump’s first three years in office.
“Measured as a fraction of the economy, we have had deficits as large or larger in the past as in the first three years of the Trump administration. But those were generally in times of recession or crisis,” Hoyt Bleakley, a professor of economics at the University of Michigan, told Newsweek.
“And, in those cases, the expanding economy tended to shrink the deficit. In contrast, the deficit increased as a fraction of the economy in the first three years under Trump, in spite of strong economic growth. That is quite unusual,” he said.
Patrick Gourley, an assistant professor of economics at the University of New Haven, also pointed to this unusual fact about the economy during Trump’s first three years in office.
“My greatest concern about the large budget deficits and increasing national debt before the pandemic were that these occurred during a time of economic growth; 2020 will most likely mark the end of a record run of American growth, yet 2019 had a budget deficit around 4.5 percent of GDP,” Gourley told Newsweek.
Gourley explained that the deficit was “large relative to historical averages,” and that this occurred despite it being a time of “sustained economic growth.”
Josh Bivens, director of research at the Economic Policy Institute, told Newsweek that he did not see the debt as growing “all-that-exceptionally under the Trump administration” prior to the pandemic. However, Bivens criticized the Trump administration’s major economic legislation—the Tax Cuts and Jobs Act of 2017—which was the main driver of increasing debt during the president’s first three years in office.
“I think that was an awful use of fiscal resources—funneling lots of money to already-rich households that didn’t need it,” the economist said. “I think we could’ve done a number of much more valuable things with those fiscal resources, but my real objection is the opportunity cost of the tax cut—what wasn’t done with those fiscal resources—rather than its effect in pushing up debt.”
When it comes to the trillions the federal government has spent to address the COVID-19 pandemic and its resulting economic fallout, most economists agree that Congress, the White House and the Federal Reserve responded appropriately to shore up the economy. They also generally agree that now is not the time to worry too much about the national debt.
“So far the federal government has performed marvelously from a fiscal and monetary policy perspective. In April, I would not have predicted the rebound in employment that America has seen, and a large part of this is due to the stimulus package,” Gourley said.
Bivens said that “given the current constellation of risks, I think the debt growing too-large too-fast should be really low on the list of things policy makers worry about.” He said he was more concerned about the economy spending “too much time with elevated unemployment,” pointing to the decade it took for unemployment to return to the level it was prior to the Great Recession.
At the same time, the growing debt is an issue that many economists believe will be necessary to address in the future. Bleakley explained that deficit spending is currently being “used to keep the economy on life-support while we struggle to solve the public-health crisis,” which he noted would benefit “future generations.” But the economist also said that these future generations would need to “shoulder the burden of paying the debt.”
Bleakley said that in recent decades “deficits have gone to support current consumption, simply because politicians couldn’t produce budgets that balance.”
Gourley said that the debt would need to be addressed eventually, although he predicted this would likely not happen for quite some time.
“The issue is the national debt probably won’t cause a sudden economic disaster that galvanizes America into action,” he said. “Instead, we’ll be more like the frog that is boiled in slowly warming water. It’s not dissimilar to climate change in this regard—if we wait until the national debt becomes an obvious crisis, it’s going to be much harder to fix.”