National Debt Under Obama
How Much Did Obama Add to the Nation's Debt?
Depending on who you ask, President Obama added anywhere from $983 billion to $9 trillion to the national debt. Who's lying? None of them. There are three ways to look at the debt added by any president.
The first, and most common, method is to subtract the debt level when he took office from the debt level when he left. The second, and more accurate, method is to add together his projected budget deficits. The third method is the fairest but also the most complicated. It’s to add only the deficits created by the president's specific initiatives.
Review these three methods below. Then, you'll be able to win any argument made about how much President Obama added to the national debt.
Method 1. Debt Added Since Obama Took Office
The largest number comes from calculating how much the debt increased during Obama's two terms. On January 20, 2009, when he was sworn in, the debt was $10.626 trillion. On January 20, 2017, when he left, it was $19.947 trillion. That's why most people say Obama added $9 trillion to the debt, more than any other president.
Method 2. Obama's Budget Deficits
It's a little misleading to hold Obama, or any other president, accountable for the deficit incurred during his first year of office. The previous administration already set the federal budget for that fiscal year. Before Obama took office, President Bush's last budget, for Fiscal Year 2009, created a deficit of $1.16 trillion. That fiscal year began on October 1, 2008 and continued until September 30, 2009. That means most of that deficit occurred after Obama took office in January. Since it wasn't his budget, it's not accurate to attribute it to him.
- FY 2009 - Even though the budget had been approved, Congress added emergency funding to stop the Great Recession. It added the first year's worth of spending from Obama's Economic Stimulus Act to the FY 2009 budget. That $253 billion accrues to Obama.
- FY 2010 - Obama's first budget created a $1.294 trillion deficit.
- FY 2011 - This budget contributed $1.3 trillion to the debt.
- FY 2012 - The deficit was $1.087 trillion.
- FY 2013 - This was the first Obama budget where the deficit, $679 billion, was less than $1 trillion. Thank sequestration, which forced a 10 percent cut in spending.
The deficits from all these budgets total $6.786 trillion. But, like most presidents, Obama's contribution to the debt was higher. There's a difference between the deficit and the debt by president. All presidents can employ a sleight of hand to reduce the appearance of the deficit. They can borrow from federal retirement funds. For example, the Social Security Trust Fund has run a surplus since 1987. There were more working people contributing via payroll taxes than retired people withdrawing benefits.
The Fund invests its surplus in U.S. Treasury notes. The president can reduce the deficit by spending these funds instead of issuing new Treasurys. As a result, Obama added $8.588 trillion to the debt.
Method 3. How Obama's Policies Increased the Debt
Is it fair to blame any president for events over which he had no control? During Obama's terms, there was less federal income than usual. The recession and the Bush tax cuts reduced tax receipts. At the same time, the cost of Social Security, Medicare, and other mandatory programs continued to increase. The War on Terror, although technically over, was still being fought in Afghanistan and Iraq.
The fairest method is to measure the debt incurred by Obama's specific policies. The Congressional Budget Office does this for every program. The CBO found that Obama's largest contribution to the debt was the Obama tax cuts, which were an extension of the Bush tax cuts. They added $858 billion to the debt in 2011 and 2012.
The next largest was the American Recovery and Reinvestment Act. It added $787 billion between 2009 and 2012. It cut taxes, extended unemployment benefits, and funded job-creating public works projects. Like the tax cuts, the ARRA stimulated the economy after the 2008 financial crisis
Obama increased military spending to around $800 billion a year. In fact, his security budget request of $895 billion in FY 2011 set a new record. In FY 2013, he requested $851 billion. That happened even though he withdrew troops from Iraq in 2012 and eliminated the threat from Osama bin Laden in 2011. Obama spent $857 billion in contingency funds during his administration. That was more than the $850 billion Bush devoted to the War on Terror.
What about the Patient Protection and Affordable Care Act? It didn't add anything to the debt in Obama's first term. Most of Obamacare's costs began in 2014 when the health insurance exchanges opened. It also extended coverage to more low-income people that year. But Obamacare's tax increases offset its costs to the tune of $104 billion between 2010 and 2019.
Congress and Obama also negotiated the sequestration budget cuts. That cut the deficit by a small percentage. When all these are added up, Obama's debt contribution was $983 billion between 2009 and 2017.