The U.S. has exceeded $20 trillion in national debt — the nation was a cool $20.16 trillion in the red as of Friday — and now that it’s crossed that mark, get ready for some finger pointing over who’s to blame.
If history shows anything, it’s that both parties share responsibility for boosting the debt. Fighting wars, big tax cuts and economic stimulus packages have all added to the burden over the years.
Here, we’ll take a look at some key moments in the debt’s trajectory until now, and also where it is going.
In August 1981, with the U.S. at the beginning of a recession, President Ronald Reagan signed major tax cuts into law. While Reagan’s supporters credit the cuts in tax rates with juicing the stock market and the U.S. economy, the downside was obvious: less money flowing into the government’s coffers. A U.S. Treasury paper shows the 1981 act reduced federal revenue by an average of $118 billion a year (in today’s dollars) during the first four years.
President George W. Bush also signed tax-cut packages into law in 2001 and 2003. Individual-income tax rates were cut, as were taxes on capital gains and dividends. This table shows where the Bush tax cuts fall in size compared to other major bills. President Barack Obama extended the cuts for two years in 2010, and made most of them permanent in 2012. Kathy Ruffing, a consultant to the Center on Budget and Policy Priorities, has estimated that the cuts originally enacted during the Bush years will account for $5 trillion of debt outstanding through fiscal 2017. That includes interest.
The U.S. spent heavily on the wars in Afghanistan — which the U.S. invaded after the Sept. 11, 2001 terrorist attacks — and Iraq. According to consultant Kathy Ruffing, the two wars account for about $2 trillion of the debt, including interest.
The year-and-a-half long Great Recession began in December 2007, brought on by the collapse of the U.S. housing market. The downturn spanned the Bush and Obama presidencies, and heralded the ballooning of budget deficits as the government responded with huge bank bailout and stimulus programs. In fiscal years 2009-2012, deficits exceeded $1 trillion.
With the U.S. still reeling from the Great Recession, President Barack Obama signed the American Recovery and Reinvestment Act in February 2009. In addition to tax cuts, Obama’s stimulus bill spent billions of dollars on unemployment benefits and infrastructure projects. Obama said the plan would be “a major milestone on our road to recovery,” but Republicans trashed the measure as a waste of government money. Originally scored at $787 billion, the Congressional Budget Office in 2015 put its price tag higher, at $836 billion. Including interest payments, it added $1 trillion to the debt through fiscal 2016, according to the Committee for a Responsible Federal Budget.
The debt is projected to keep growing as the U.S. spends more on programs for its aging population. Last spring, the Congressional Budget Office estimated that if current laws remain the same — that is, if President Donald Trump and the Republican Congress were to do nothing — debt held by the public would rise to 150% of the total economy in 2047 from the 77% it’s at now. Trump has vowed a few polices that could have a big impact on the debt, including major tax cuts and a military buildup. What’s more, he pledged to leave programs including Medicare and Social Security unchanged. A tax plan Trump proposed during the campaign would add about $7.2 trillion to the debt over a decade, the Tax Policy Center estimated.
On Friday, Trump signed a bill to suspend the debt limit through Dec. 8, enabling the Treasury to borrow more money. The president also said last week he saw “a lot of good reasons” to eliminate the debt ceiling, though that plan would likely meet stiff resistance in the Republican-controlled Congress.