To the surprise of absolutely no one, the nation’s debt has skyrocketed during President Barack Obama’s tenure. In a little over five and a half years, the Obama administration has added more than $7 trillion to the total, a number that represents more debt accumulation than the administrations of George Washington through Bill Clinton combined. At the close of business on July 31, the nation’s debt was $17.6 trillion, with $7.06 trillion of it accumulated since Obama was inaugurated in 2009.
CNS News offers some gut-wrenching perspective regarding the numbers:
As of June, there were 115,097,000 households in the United States, according to the U.S. Census Bureau. The $17,687,136,723,410.59 in debt the federal government had accumulated as of the end of July equaled $153,671.57 per household.
The $7,060,259,674,497.51 in new debt that the federal government has taken on during Obama’s presidency equals $61,341.82 per household.
The median household income in the United States in 2012 (the latest year estimated) was $51,017. Thus, President Obama has increased the federal debt by more than the typical household’s annual income.
There is bitter irony and hypocrisy attached to these numbers. “The problem is, is that the way Bush has done it over the last eight years is to take out a credit card from the Bank of China in the name of our children, driving up our national debt from $5 trillion for the first 42 presidents –number 43 added $4 trillion by his lonesome, so that we now have over $9 trillion of debt that we are going to have to pay back– $30,000 for every man, woman and child. That’s irresponsible. It’s unpatriotic,” said presidential candidate Barack Obama, at a 2008 campaign event in Fargo, ND.
Bush was indeed nearly as irresponsible as Obama, adding $5.849 trillion in eight years to the national IOU, an increase of 101 percent over the $5.8 trillion in debt America owed at the end of Clinton’s last budget in FY 2001.
Yet it is worth noting two salient facts: the largest accumulation of debt on Bush’s watch occurred after Democrats gained control of both houses of Congress in 2006; and the Troubled Asset Relief Program (TARP) Bush signed into law in 2008, accounting for a large part of his administration’s debt accumulation, was supported by a majority of Democrats in both the House and Senate, while a majority of Republicans opposed the measure. Furthermore, Democrats have had majority control of the government, including total control for the first two years of the Obama administration, for the last eight years.
None of this should be seen as an excuse to mitigate the economic irresponsibility wrought by Bush and his “compassionate conservative” agenda that represented nothing more than “tax-and-spend liberalism” by another name. But apparently once our current Redistributionist-in-Chief entered the Oval Office, taking out a credit card for the Bank of China in the name of our children was no longer considered irresponsible or unpatriotic.
Americans will never know with absolute certainty whether bailing out the banks was necessary. On the other hand, they are certain about a number of other things. They know there wasn’t a single resignation demanded from those who engineered the crisis in return for that bailout. They know the Federal Reserve policies emanating from the crisis, including multiple rounds of Quantitative Easing (QE), coupled with the Fed’s Zero Interest Rate Policy (ZIRP), have precipitated both the weakest recovery since WWII, and a financial bonanza for the top 1 percent of Americans, who have garnered 90 percent of the income gains since the so-called recovery began in 2009. They know the Fed’s policies were so egregious, that Andrew Huszar, who helped engineer the Central Bank’s bond-buying spree, offered up a public apology in the Wall Street Journal for “the greatest backdoor Wall Street bailout of all time.”
But there is something most Americans don’t know. In 2011, in one of the most under-the-radar financial stories in the history of the nation, Bloomberg News reported that the Federal Reserve made $7.7 trillion available to the banking industry, completely in secret. “The Fed didn’t tell anyone which banks were in trouble so deep they required a combined $1.2 trillion on Dec. 5, 2008, their single neediest day,” the article revealed. “Bankers didn’t mention that they took tens of billions of dollars in emergency loans at the same time they were assuring investors their firms were healthy. And no one calculated until now that banks reaped an estimated $13 billion of income by taking advantage of the Fed’s below-market rates.”
Thus while ordinary Americans struggled through the worst recession since the Great Depression, those partially responsible for it were taken care of. The other bad actor in this fiasco was the federal government itself, which turned owning a home into a de facto entitlement program, forcing the banks to offer mortgages to minority applicants with shaky credit, lest they be accused of racism and subject to the attendant federal penalties.
The Keynesian economists who currently run the show continue to insist all the “pump-priming” that precipitated the $7 trillion in additional debt—and counting—accrued during the Obama administration, was a necessary tradeoff for our current recovery.
It is a “recovery” in which 11.4 million Americans have left the workforce since 2009, and 75 percent of the jobs created last year were part-time. As of last month the part-time labor force still contained 7.5 million Americans who want full-time employment. The labor-force participation rate remains at its lowest level since 1978, and shows few signs of rebounding any time soon. Record numbers of Americans remain on welfare and disability. Most of the jobs being created are low-paying and insufficient in number to keep up with population growth. And while the initial estimate of GDP growth for the 2nd quarter was 4 percent, it was offset by a negative 1st quarter. Moreover, most economist expect the nation’s annual growth rate to come in at under 3 percent, “not high enough to break us out of the wage-stagnating ‘new normal’ of the Obama era,” as the New York Post’s Charles Gasparino put it.
Through it all, the debt keeps climbing. According to the Congressional Budget Office (CBO) the total amount of publicly-held federal debt is now 74 percent of the economy’s annual output (GDP) “a higher percentage than at any point in U.S. history except a brief period around World War II and almost twice the percentage at the end of 2008.”
In short, we remain on an unsustainable debt trajectory with no end in sight, during a flaccid economic recovery sustained only by saddling future generations of Americans with the burdens of our unconscionable economic recklessness.
The late Herbert Stein, chairman of the Council of Economic Advisors under Presidents Nixon and Ford, characterized the ultimate consequences of such recklessness. “If something cannot go on forever, it will stop,” he said. One is left to wonder whether that stoppage will be abrupt, or simply an incremental ratcheting down of economic expectations, along with many others that comprise the foundation of American exceptionalism. Perhaps that’s what the “fundamental transformation” of the United States is really all about.
Freedom Center pamphlets now available on Kindle: Click here.