This is the corrected title of a bogus (often statistically incompetent) article Craig Eyermann at the Independent Institute (formerly highlighted as Ironman). He wrote:
After two years in office, President Joe Biden hasn’t accomplished much positively boast about.
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But while his economic legacy didn’t turn out well, he gave Americans a lasting heritage. During his two years in the Oval Office, he boosted the U.S. national debt by 11%. That’s really telling, because the day he was sworn in, the national debt was $27.76 trillion.
As far as I know, Mr. Eyermann’s title is wrong.according to Department of Treasury Debt Bureau (Accessed March 8, 2023) The total federal debt was $31454980005742.4 on January 20, 2023 and $27751896236414.7 on January 20, 2021. Using excel (to make sure there were no typos) I found that the change over the two years was $3703083769327.70 instead of $3,695,343,467,324.62 (as shown in the table) Political Computing Blog Post his reference). Since the January 20, 2023 numbers match my numbers and those on the Treasury website, I can only conclude that he is doing something wrong. He also made mistakes in calculating percentage growth rates. I get a change of 13.3% (instead of 11%). My advice – don’t trust the math in Independent Institute works.
But there are actually bigger problems with Mr Eyermann’s calculations. First, there is no background on what other people have done in their first two years. In the two-year period between Jan. 20, 2017, and Jan. 20, 2019*, total federal debt rose 11.7% — a period of strong growth (January 2019 was more than a year before the pandemic).
Second, we might consider normalizing the debt burden in some way. One way is to look at the ratio of debt to potential GDP. We then have the following comparison (I’m using end-of-month debt data for now).
figure 1: Gross federal debt in billions, month-end (blue, left axis) and gross federal debt as a percentage of potential GDP (red, right axis). Numbers enclosed by black arrows indicate changes over 2 years. The quarterly estimates of potential GDP were converted to monthly values using the quadratic interpolation program in EViews. Orange shading indicates the Trump administration. source: dallas federal reserve bank, congressional budget officeand the author’s calculations.
Total federal debt includes debt held within the government (that is, debt held by the Social Security Trust Fund). A more appropriate series is Debt Held by the Public (FRED series FYGFDPUN). I don’t have this series on a monthly basis, but I have marketable federal debt, which has been pretty close to FYGFDPUN at a quarterly frequency for the last two decades. Here is a similar chart using marketable debt.
figure 2: Marketable federal debt in billions, month-end (blue, left axis) and marketable federal debt as a percentage of potential GDP (red, right axis). Numbers enclosed by black arrows indicate changes over 2 years. The quarterly estimates of potential GDP were converted to monthly values using the quadratic interpolation program in EViews. Orange shading indicates the Trump administration. source: dallas federal reserve bank, congressional budget officeand the authors’ calculations.
In assessing debt burdens, one may wish to use the market value of the debt rather than the face value. The face value represents the issue rate, while the market value represents the prevailing rate at the time of observation. Using the market value of marketable debt (roughly, debt held by the public), we have the following graph.
image 3: Market value of marketable federal debt in billions at month-end (blue, left axis) and market value of marketable federal debt as a percentage of potential GDP (red, right axis). Numbers enclosed by black arrows indicate changes over 2 years. The quarterly estimates of potential GDP were converted to monthly values using the quadratic interpolation program in EViews. Orange shading indicates the Trump administration. source: dallas federal reserve bank, congressional budget officeand the author’s calculations.
In other words, the Trump administration is a veritable fiscal profligate by adding debt to potential GDP during a boom. Even before the Covid response.
Additional analysis by Mr. Eyermann on Definition of externality, Which indicators are most useful for tracking state-level economic activity, Time Series Econometrics, Add/Subtract Chain Weighted Volume I, Add/Subtract Chain Weighted Volume IIand Report Nominal vs. Actual Amplitudes.
* Actually an average of January 18 and January 22, 2019, as no data was reported for January 20.
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