Myth Debunk

Debunking Political and Historical Myths

Reagan vs Obama – Deficit Edition!

1012895_10152166733436275_7088125268663356469_nDid Reagan triple the deficit? Did Obama cut it in half?

I see this one on social media pretty often, and keep meaning to discuss it, so here it is.

While I understand as most people do, that Congress controls spending and the budget [1], for the sake of this argument I’m going to keep it based on president, since that is what the claim is using. Later on I will write about Congress, debt, deficits, and Presidents. I will be basing it on the last budget of the outgoing president (which covers the first year of the incoming president), to the last budget of the current president. [2]

I’m going to compare deficits, and debt ceiling increases, and ignore the “compared to Hitler” part since it’s just conjecture, and I’ve heard pretty much every President in my lifetime compared to Hitler at one point or another, and has nothing to do with deficit or debt.

Reagan Deficits and Debt Ceilings

Deficits

Reagan was in Office from Jan, 21 1981 until Jan 20, 1989. The deficit at the end 1981 was $78 billion dollars.  His last budget deficit was $152 billion dollars. So during his term he had a net increase of only double, not triple.  the deficit under Reagan reached $207 billion in 1983, two years after Reagan passed the Economic Recovery Tax Act of 1981 [3] which reduced taxes, effectively reducing tax revenue. It turned out to be too much loss of revenue, combined with increased spending, so in 1982 the Tax Equity and Fiscal Responsibility Act of 1982 [4] rescinded some of those cuts, and a few more laws in following years helped bring in more revenue, but with increased spending, decreased the budget deficit back to the $152 billion in 1989. Revenue doubled in Reagan’s 8 years, but so did spending, which in turn caused the doubling of the deficit. [5]

Year Revenue Spending Deficit
1981 599,272 678,241 -78,968
1982 617,766 745,743 -127,977
1983 600,562 808,364 -207,802
1984 666,438 851,805 -185,367
1985 734,037 946,344 -212,308
1986 769,155 990,382 -221,227
1987 854,287 1,004,017 -149,730
1988 909,238 1,064,416 -155,178
1989 991,104 1,143,743 -152,639

Debt Ceilings

There were actually 17 Debt ceiling increases under Reagan, not 18: [6]

Date Limit
September 30, 1981 999.8
September 30, 1981 1,079.8
June 28, 1982 1,143.1
September 30, 1982 1,290.2
May 26, 1983 1,389.0
November 21, 1983 1,490.0
May 25, 1984 1,520.0
July 6, 1984 1,573.0
October 13, 1984 1,823.8
November 14, 1985 1,903.8
December 12, 1985 2,078.7
August 21, 1986 2,111.0
October 21, 1986 2,300.0
May 15, 1987 2,320.0
July 30, 1987 2,320.0
August 10, 1987 2,352.0
September 29, 1987 2,800.0

Obama Deficits and Debt Ceilings

Deficits

Obama has been in office since Jan 21, 2009, and is currently (as of this writing) still in office. The deficit at the end of 2009 (Last budget under Bush) was $1.4 trillion Although the original budget under Bush would have only resulted in a $407 billion deficit (a reduction from the 2008 deficit of $459 billion) the decreased revenue from the recession (half a trillion less revenue and $600 billion more in spending in 2009 than in 2008), and added spending from the 2008 TARP [7] and 2009 Stimulus [8] increased the deficit to $1.4 trillion. In the following years, as the recession subsided, revenue began to increase again, while spending stayed the same. Revenue continued to increase from 2010 until 2014 (the latest budget) by almost a trillion dollars, while spending stayed about the same, which caused the deficit to decrease. The 2015, 2016 and 2017 (Last budget under Obama) Estimates show even more increases in revenue, and even more spending, while deficits stay at the post 2007 levels. So effectively Obama decreased the deficit not by reducing spending, or by reducing taxes, but by increasing tax revenue sustaining the half trillion dollar deficits. From 2009, until the current 2014, the deficit decreased by 2/3 after spiking to 1.4 trillion. [5]

Year Revenue Spending Deficit
2009 2,104,989 3,517,677 -1,412,688
2010 2,162,706 3,457,079 -1,294,373
2011 2,303,466 3,603,059 -1,299,593
2012 2,449,988 3,536,951 -1,086,963
2013 2,775,103 3,454,647 -679,544
2014 3,021,487 3,506,089 -484,602
2015 estimate 3,176,072 3,758,577 -582,505
2016 estimate 3,525,179 3,999,467 -474,288
2017 estimate 3,754,980 4,217,798 -462,818

Debt Ceiling Increases

There have been 7 debt limit increases so far. [6]

Date Limit
February 17, 2009 12104
December 24, 2009 12394
February 12, 2010 14294
January 30, 2012 16394
May 19, 2013 16700
February 7, 2014 17,200 and  Auto adjust
March 15, 2015 End of auto adjust

References:

[1] http://history.house.gov/Institution/Origins-Development/Power-of-the-Purse/
[2] http://www.acenet.edu/news-room/Pages/A-Brief-Guide-to-the-Federal-Budget-and-Appropriations-Process.aspx
[3] https://www.congress.gov/bill/97th-congress/house-bill/4242
[4] https://www.congress.gov/bill/97th-congress/house-bill/4961
[5] https://www.whitehouse.gov/omb/budget/Historicals
[6] https://www.whitehouse.gov/sites/default/files/omb/budget/fy2016/assets/hist01z1.xls
[7] http://www.gpo.gov/fdsys/pkg/PLAW-110publ343/html/PLAW-110publ343.htm
[8] http://www.gpo.gov/fdsys/pkg/BILLS-111hr1enr/pdf/BILLS-111hr1enr.pdf

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One Nation Under Debt: Hamilton, Jefferson, and the History of What We Owe


Like its current citizens, the United States was born in debt-a debt so deep that it threatened to destroy the young nation. Thomas Jefferson considered the national debt a monstrous fraud on posterity, while Alexander Hamilton believed debt would help America prosper. Both, as it turns out, were right.

One Nation Under Debt explores the untold history of America’s first national debt, which arose from the immense sums needed to conduct the American Revolution. Noted economic historian Robert Wright, Ph.D. tells in riveting narrative how a subjugated but enlightened people cast off a great tyrant-“but their liberty, won with promises as well as with the blood of patriots, came at a high price.” He brings to life the key events that shaped the U.S. financial system and explains how the actions of our forefathers laid the groundwork for the debt we still carry today.

As an economically tenuous nation by Revolution’s end, America’s people struggled to get on their feet. Wright outlines how the formation of a new government originally reduced the nation’s debt-but, as debt was critical to this government’s survival, it resurfaced, to be beaten back once more. Wright then reveals how political leaders began accumulating massive new debts to ensure their popularity, setting the financial stage for decades to come.

Wright traces critical evolutionary developments-from Alexander Hamilton’s creation of the nation’s first modern capital market, to the use of national bonds to further financial goals, to the drafting of state constitutions that created non-predatory governments. He shows how, by the end of Andrew Jackson’s administration, America’s financial system was contributing to national growth while at the same time new national and state debts were amassing, sealing the fate for future generations.

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  • Jeff Christianson

    I learned at a very young age that a saver gets paid interest for merely having money and a debtor is required to pay interest when they borrow money. Thus for all of my adult life, I have always saved and avoided debt whenever possible. Then when I was in debt….to get debt free as soon as possible.
    I am in better shape than 99% of the public…yet I was never in the top 1% in terms of income.

    • Mike

      Wish i was as disciplined as you … Bravo on your success

    • Richard Baker

      Ditto

  • Jason Taylor

    bja, the posts here lack an answer/follow-up to the posed questions. I suggest you more clearly answer the opening question, which is usually is the social media post true or false. Snopes has a clear green=true, red=false, or yellow=maybe. Don’t just discuss the issue. You can’t force the reader to figure it out themselves. We don’t have the time. I’ve read this and have a feeling you are agreeing with the social media post, but am still unsure.

    • BJA

      I did that at first when I started writing some of these things. but I felt like I was imposing an opinion sometimes. I’m trying to not have an opinion, but present the facts and let the readers make a decision. It was also presenting a problem with questions that were more than true, less than false, true but for different reasons, etc.. The last post I made I included a “Conclusion” which I guess would help with what you said. This post does in fact give an answer to each thing imposed by question.

      Did Reagan triple the deficit? ” which in turn caused the doubling of the deficit.” doubled, not tripled.

      Did Obama cut the deficit in half? “the deficit decreased by 2/3 “cut by 2/3, not half. ” so the image is wrong, he didn’t halve the deficit, it was more than half.

      See the dilemma? I guess I could explain that in the conclusion too, but simple true/false/maybe wouldn’t really work.

      • Jason Taylor

        Thanks very much for your answer.

        You wrote, “I felt like I was imposing an opinion sometimes” and “but present the facts.”

        Well, IMO, these phrases are counter to the scientific method. IMO, there are no “true” facts. There are only probabilities, and in this case opinions of what the facts are and are not. That’s why excluding your opinion is, ironically, arrogant, for it implicitly assumes that the facts you’ve shown are themselves unquestionable. In reality, you are discussing the issues, but not really furthering them either way very much. Here, nobody is wrong, and nobody is right. IMO, it is better to give more direct opinions so that it takes less time to make sense of your posts. It is also more scientific. Facts without good interpretation are like air. They can blow in any direction.

  • Richard Hidalgo

    So you are saying that the Tax Act of 1981, which was signed
    into law on for the loss of revenue from the previous year (1980, which you do
    not show), and that the increases in taxation from the Fiscal Responsibility
    Act of 1982, which was signed into law on September 3, was responsible for the
    increase in revenue (from 599,272 to 617,766)?
    I don’t think so! That is way too
    short of time for these acts to have any affect within the years they were
    signed into law. It is much more plausible that the tax increase had the effect of the lower revenue from 1982 (617,766) to 1983 (600,562).

    • mjp1800

      Tax revenues increased due to the economic recovery.

      • Richard Hidalgo

        If revenue increases happen when a tax increase is implemented, the tax will slow what possible increase would/could happen. Tax revenues increase due to the economic recovery either in spite of tax increases or because of tax decreases. A tax decrease will never be a cause of slowing an economy.

        • mjp1800

          What I’m said was in regard to the decrease in the deficit under Obama. Sequestration played a role. So did the tepid recovery.

          • Richard Hidalgo

            Does not contradict what I stated.

          • mjp1800

            Richard Hidalgo wrote, “Lower taxes have NEVER decreased revenues to the federal government – SHOW US WHERE IT HAS.”

            Wow, not even Laffer would have gone that far.

            http://taxfoundation.org/blog/does-lowering-taxes-increase-government-revenue

          • Richard Hidalgo

            And STILL waiting for ANY data showing tax decreases resulted in lower revenues to the federal government (Laffer would agree with me)…

          • mjp1800

            I refuse to engage you further, because either you are lazy, or your level of reading comprehension is too low to bother with. I provided the data in the link. Just from the standpoint of common sense, a zero rate means zero revenue. Wowser.

          • Richard Hidalgo

            I see why you are leaving this debate, you are a fool that actually believes I was implying a “zero rate”.

        • Colin Ripoll

          A tax decrease will never cause a slowing of the economy. Wow what a statement. How bout if there is less govt revenue coming in due to lower corporate taxes and estate taxes and therefore less construction projects (less jobs) – less increases in wages (people spend more when they have more) – I could go on for awhile

          • Richard Hidalgo

            Lower taxes has NEVER decreased revenues to the federal government – SHOW US WHERE IT HAS.

  • Elton Hartzler

    . . . . Thanks for your accurate statistics, facts, and figures, but whenever I see a meme image like that from the Looney Left my first thought is that the author is either too stoopit to understand the difference between the debt and the deficit or they think their intended audience is. Just a thought.

    Also, I was shocked, and I do mean literally shocked, that you didn’t mention the Budget Sequestration that was forced on Obama by Boehner and went into affect on January 1, 2013. Have you already forgotten how Obama as an emergency measure had to suspend Kiddie Tours at the White House?
    .

  • juandos

    This posting is laughable at best…

    • bja

      It is pretty funny how many people believe these social media images.

    • Not Falling For It

      Why?

      • juandos

        Apparently you need someone to read and explain this supposed article to you…

  • Sam Clayton

    Learn the difference between the national debt and deficit BEFORE you decide to write about it please.

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