Posted on | February 6, 2012 | No Comments
There is a little graphic being circulated around the Internet intended to show that President Obama has recklessly doubled the total US debt accumulated since President Washington.
As a piece of political propaganda it is brilliant. It implies that President Obama’s administration is worse than all previous administrations when it comes to debt. Is it? As a performance “indicator” it is not so good.
The US debt is growing exponentially, and has been for 40 years under all presidents. Think of a pond with exponential growth of lily pads. Every week the number of lily pads growing in it doubles. How full was the pond one week before it was completely full of lily pads? Half full, and it took many weeks to get there, just like the US debt took many presidents to get to the point where it had half as much debt as today. A better indicator of exponential growth is not how long ago there was half as much, but the length of the doubling period.
To account for increasing population, it’s better to measure how profligately US governments have been going into debt by calculating debt per capita rather than gross debt. In September 2011, US debt per capita was $47,652. It took 8 years, from 2003 to 2011, for debt/capita to double from $23,826. So the graphic is superficially correct. (It would also be better to account for inflation and use constant dollars. The trouble is; what indicator of inflation should be used? See here and here and here and here.)
The chart below shows the terrifying picture of US debt/capita since 1791.
The huge debt figures at the end of the 20th century completely mask what was going on in the 19th. Debt per capita actually declined most years, with the exception of the period during the Civil War (see below).
The 20th century is a different picture all together, as seen in the chart below. The scale shows powers of two, to make it easier to see how long it takes it to double debt/capita. There were two jumps in World War I and II. Between and immediately after the wars debt per capita was flat or declined. Then around 1970, debt per capita took off.
The chart below works backwards, starting with the current debt/capita of $47,652, and then downwards to show the year at which the debt per capita was one half this amount, one quarter and so on. Each time the debt/capita line crosses the dotted horizontal lines, debt has doubled (going left to right) or halved (going right to left).
From 1976 to 2011, debt per capita grew 16 times—that means it has doubled 4 times (from $2,978 to $47,652). That’s a compound average growth of 8.2% in debt per capita.
At 8% growth, debt per capita will keep doubling every eight or nine years or so. That’s how long it took to double it to President Obama’s number from George W. Bush’s number in 2003. All he is doing is holding the shovel steady as the US inexorably digs a deeper hole.
(Note: to calculate debt per capita I linearly interpolated US population between censuses, which are taken every ten years. Source of debt data: http://www.treasurydirect.gov).