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Friday, October 1, 2010

Debt: Congress Or The President? (with updates)

Who is responsible for the national debt? Or, to ask another way, who is the more fiscally conservative party, Democrats or Republicans?

To answer, I've put together three charts. Each looks at debt as a percentage of GDP, based on the following formula:

Gross Federal Debt
- Debt Held By Government Accounts
- Debt Held By The Federal Reserve System
-----------------------------------------
= Debt Held By The Public

Colors represent the majority party: blue for Democrats, red for Republicans.

There was a split Congress from 1981 to 1987: the Senate had a 7-8 seat Republican majority while Democrats held the House of Representatives.

From 2001-2003, each party held 50 seats in the Senate. Vice President Dick Cheney, as the tie-breaking vote, puts those years in the Republican column.

From 2007-2009, each party held 49 seats, but the two independent Senators caucused with the Democrats, putting those years in the Democrats' column.

Remember that Federal budgets are voted on one year in advance: the 2001 budget, for instance, was submitted to Congress and signed by the President in 2000. The bars are adjusted to reflect the time difference between budget year and calendar year.

The first chart shows the size of the national debt and who held the majority in Congress:



Does it look like there are any correlations? Let's tweak the chart slightly:



This second chart only looks at the House of Representatives, not the Senate. If anything, it's harder to make the point that Democratic Congresses are responsible for the national debt: under Democrats, the debt went down steadily in the late 1950s and up steadily in the early 1990s.

There does seem to be one area where the numbers correlate - Presidential terms:


Now the rises and falls are starting to make sense:

  • President Truman took the post-World War II debt down from 98% to 52%.
  • President Eisenhower continued the trend, lowering the debt to just under 40% at the end of his term.
  • Presidents Kennedy and Johnson lowered it still further to 23.6%
  • Presidents Nixon, Ford and Carter kept debt relatively constant: during their Administrations, debt held at 20.3%, plus or minus two percentage points.

With the exception of two years during President Truman's Administration and another two years in President Eisenhower's, all the progress made in lowering the national debt came under Democratic Congresses.

  • Presidents Reagan and Bush presided in a steady rise in debt: from 1982 to 1993, debt went from 24.5% of GDP to 44.4% - an increase of almost 20 percentage points.
  • Under President Clinton, debt went back down: from 44.1% to 27.2%
  • Under President Bush, it went back up: from 27.8% to 47.6%

Presidents establish the budget priorities for the nation, and the charts make it pretty clear that debt rises and falls based on those priorities, not based on who holds the majority in Congress.

Update: Brad DeLong put together this chart that illustrates the answer quite nicely:

Related post: The United States of Inequality

Update 2: the Washington Post has a great infographic illustrating the differences between the budgets that Presidents have submitted, and the budgets they've ended up with.

(reposted from a previous source)

2 comments:

  1. Does this control for potential filibustering? Just because the Democrats hold 55 seats int he Senate or 55% of the votes in the house does not mean they controlled that house, and that could skew the results.

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  2. @Anonymous

    The filibuster doesn't enter into this analysis for several reasons:

    1. The filibuster would historically* only play a part when one party held the House, and the other party held the Senate - a divided Congress. As shown in the first chart, there's only one period when that's happened: 1981-1987.

    2. The second chart shows only the House of Representatives, not the Senate.

    3. Since the Congressional Budget Act of 1974, the budget process has followed a set of rules that specifically limit debate in the Senate, minimizing (but not eliminating) the possibility of filibuster.

    * Use of the filibuster as a legislative stalling tactic is a very recent development.

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