Biden racked up more nominal debt than Trump and without a Covid crisis

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5 MIN READ - Trump critic: “Donald Trump racked up more debt than any president in history.”

Math: “Nope, Biden racked up $8.5 trillion in four years compared to Trump’s $7.8 trillion. And Biden didn’t have a worldwide pandemic, an economy locked down by state governments, and tons of pork added to rescue packages held hostage by Nancy Pelosi.”

Read on for the more nuanced version of these wonkish numbers from the Cautious Optimism Correspondent for Economic Affairs who accounts for inflation, GDP, and even a few comparisons to Barack Obama and Ronald Reagan’s national debts.

During Joe Biden’s four years as president the Economics Correspondent saw this claim repeated more times than he can remember: 

“Donald Trump racked up more debt than any president in history.”

If any of you should see or hear that comment again, you can confidently reply that no, Joe Biden has since racked up more.

1. National debt at Obama’s inauguration: $10.627 trillion
    National debt at Trump’s first inauguration: $19.947 trillion
    =Increase in debt (Obama): $9.32 trillion

2. National debt at Trump’s first inauguration: $19.947 trillion
    National debt at Biden’s inauguration: $27.752 trillion
    =Increase in debt (Trump): $7.805 trillion

3. National debt at Biden’s inauguration: $27.752 trillion
    National debt at Trump’s second inauguration: $36.218 trillion
    =Increase in debt (Biden): $8.466 trillion

(Source: U.S. Treasury Department)

There are a few nuances with Trump debt and Biden debt criticisms which we’ll review in a moment.

But first of all it’s clear under Barack Obama’s administration the Treasury racked up more debt than either Trump or Biden. But it’s also obvious Obama served two terms so it’s not really fair to accuse him of “racking up more debt than any other president," at least in nominal terms.

So we’re really comparing two presidents who served one term each, with Trump of course just starting his second, non consecutive term in January.

Simply comparing Trump’s first term and Biden’s, it’s pretty clear that on a nominal basis Biden increased the debt by $8.466 trillion vs. Trump’s $7.805 trillion. So there goes the simple accusation that “Trump racked up the most.”

DEBT, INFLATION, AND PANDEMIC

Now here’s where the nuance comes into play.

When adjusted for inflation Biden’s increase in debt becomes slightly smaller in real terms than Trump’s, about 3% less.

But Trump’s typically deranged critics don’t really address any nuance whatsoever when they throw out bombs like “Trump racked up more debt than any president in history.” 

So it's going to be hard for them to complain when you throw a bomb back that “No, Biden racked up more than Trump: $8.5 trillion vs $7.8 trillion.”

Now if we, or any Trump critic, decide to stop throwing bombs, be more analytical and start digging into additional factors like inflation then sure, Biden’s expansion of government debt is 3% smaller when calculating in inflation-adjusted terms.

But then nuance also demands we look at other specific circumstances surrounding the two presidents’ fiscal performances, not just pick and choose the most convenient one. After all, we don't conduct ourselves like CNN reporters.

As we all know, most of Trump’s debt was accumulated during the Covid pandemic in his last year, or more accurately state governments locking down the nation’s economy. 

With the U.S. economy forcibly placed in a coma, unemployment shot up to 14%, tax revenues dried up, unemployment claims ballooned, and the Trump administration also moved to direct immediate relief funds to American citizens and businesses thrown out of work due to government lockdowns.

CO Nation might also recall back when that “immediate” relief was delayed by Nancy Pelosi and the Democratic House of Representatives who held the CARES package hostage, demanding (and ultimately getting) hundreds of billions of borrowed dollars in pork added on for targeted constituencies, government bureaucracies, diversity programs, and near-bankrupt state and local governments.

Another CARES package was also held up by the Pelosi House demanding hundreds of billions more in pork right before Trump departed the White House.

Joe Biden, by contrast, had no public health or fiscal crisis to deal with. When he took office the Covid vaccine was already being dispensed and the economy, by then free from state lockdowns, was rapidly recovering. The unemployment rate had already fallen by 8.4 percentage points during Trump’s last eight months in office, the fastest decline in history. And rebounding GDP growth in Trump's last three quarters rose at annualized rates of +35.2%, +4.4%, and 5.64% respectively.

Yet without any of the massive headwinds Donald Trump faced, the Biden administration still managed to rack up even more debt nominally, and nearly as much in real terms.

DEBT, REAL GDP, AND OBAMA

The contrast is even clearer if we compare just the first three years of each president’s term, thereby excluding the unusual crisis year of 2020.

1. National debt at Trump’s first inauguration: $19.947 trillion
    National debt after three years: $23.210 trillion
    =Increase in debt (Trump): $3.26 trillion

2. National debt at Biden’s inauguration: $27.752 trillion
    National debt after three years: $34.077 trillion
    =Increase in debt (Biden): $6.325 trillion

Source: St. Louis Federal Reserve

Excluding Trump’s final year in office, when Covid was raging across the globe and state governments placed the U.S. economy in a coma, Trump racked up far less debt than Biden—measured both nominally and inflation-adjusted.

In fact, if we use the most important metric to economists—debt as a % of GDP—and adjust it for inflation (debt as a % of real GDP), we see real national debt under Trump rose much more slowly during his first three years.

1. National debt as % of real GDP at Trump’s inauguration: 102.31%
    National debt as % of real GDP after three years: 112.23%
    =Change (Trump): +9.92 percentage points

2. National debt as % of real GDP at Biden’s inauguration: 133.38%
    National debt as % of real GDP after three years: 150.03% 
    =Change (Biden): +16.65 percentage points

(Source: St. Louis Federal Reserve)

Incidentally, even if we account for Barack Obama's two terms he increased the national debt as a share of real GDP nearly as fast as Biden.

3. National debt as % of real GDP at Obama’s inauguration: 68.27%
    National debt as % of real GDP at Trump’s inauguration: 102.31%
    =Change (Obama): +34.04 percentage points

(Source: St. Louis Federal Reserve)

Unlike Biden though, Obama had a legitimate excuse. He came into power right at the tail end of the Great Financial Crisis and had a major recession hangover, high unemployment and lower tax revenues to deal with.

However Obama also chose to make matters worse—a lot worse—with massive Keynesian economic stimulus policies, meaning he opted to borrow trillions of dollars to blow on politically-connected “stimulus” in the belief that government spending would accelerate economic recovery.

Did it? In the end the 2008-2016 period was the slowest GDP recovery, by far, after any financial crisis in American history (all seventeen of them). It was also the second slowest return to full employment after a financial crisis, and only three months faster than the Great Depression’s return to full employment from 1933 to 1941 (see link to more details on that).

https://www.cautiouseconomics.com/2018/09/macroeconomics-01.html

So Obama shares some of the blame for pushing the national debt as a % of real GDP up faster than any peacetime president in history. Yes, faster than Ronald Reagan whose increase was only 15.11 percentage points in eight years compared to Obama’s 34.04 (St. Louis Federal Reserve).

So yes, the few TDS-afflicted who pivot to “nuance” to exonerate Biden’s massive debt pileup will discover that it works both ways.

And the next time you hear someone say… 

“Trump racked up more debt than any president ever,” 

…you can tell them…

“Nope, Biden racked up $8.5 trillion in four years compared to Trump’s $7.8 trillion. And Biden didn’t have a worldwide pandemic, an economy locked down by state governments, and tons of pork added to rescue packages held hostage by Nancy Pelosi.”Comment: More details on Obama’s post-2008 recovery, the worst GDP recovery in American history and the second worst employment recovery.