One of President Trump’s lesser known but profoundly damaging legacies will be the explosive rise in the national debt that occurred on his watch.
The financial burden that he’s inflicted on our government will wreak havoc for decades, saddling our kids and grandkids with debt.
The national debt has risen by almost $7.8 trillion during Trump’s time in office. That’s nearly twice as much as what Americans owe on student loans, car loans, credit cards, and every other type of debt other than mortgages, combined, according to data from the Federal Reserve Bank of New York. It amounts to about $23,500 in new federal debt for every person in the country.
The growth in the annual deficit under Trump ranks as the third-biggest increase, relative to the size of the economy, of any US presidential administration, according to a calculation by Eugene Steuerle, cofounder of the Urban-Brookings Tax Policy Center. And unlike George W. Bush and Abraham Lincoln, who oversaw the larger relative increases in deficits, Trump did not launch two foreign conflicts or have to pay for a civil war.
Economists agree that we needed massive deficit spending during the COVID-19 crisis to ward off an economic cataclysm, but federal finances under Trump had become dire before the pandemic. That happened even though the economy was booming and unemployment was at historically low levels. By the Trump administration’s own description, the pre-pandemic national debt level was already a ’'crisis’' and a ’'grave threat.’'
The combination of Trump’s 2017 tax cut and the lack of any serious spending restraint helped both the deficit and the debt soar. So when the once-in-a-lifetime viral disaster slammed our country and we threw more than $3 trillion into COVID-related stimulus, there was no longer any margin for error.
Our national debt has reached immense levels relative to our economy, nearly as high as it was at the end of World War II. But unlike 75 years ago, the massive financial overhang from Medicare and Social Security will make it dramatically more difficult to dig ourselves out of the debt ditch.
Falling deeper into the red is the opposite of what Trump, the self-styled ’'King of Debt,’' said would happen if he became president. In a March 31, 2016, interview with Bob Woodward and Robert Costa of The Washington Post, Trump said he could pay down the national debt, then about $19 trillion, ’'over a period of eight years’' by renegotiating trade deals and spurring economic growth.
After he took office, Trump predicted that economic growth created by the 2017 tax cut, combined with the proceeds from the tariffs he imposed on a wide range of goods from numerous countries, would help eliminate the budget deficit and let the United States begin to pay down its debt. On July 27, 2018, he told Fox News’s Sean Hannity, ’'We have $21 trillion in debt. When [the 2017 tax cut] really kicks in, we’ll start paying off that debt like it’s water.’'
Nine days later, he tweeted, ’'Because of Tariffs we will be able to start paying down large amounts of the $21 trillion in debt that has been accumulated, much by the Obama Administration.’'
That’s not how it played out. When Trump took office in January 2017, the nonpartisan Congressional Budget Office was projecting that federal budget deficits would be 2 percent to 3 percent of our gross domestic product during Trump’s term. Instead, the deficit reached 3.8 percent of GDP in 2018 and 4.6 percent in 2019.
There were multiple culprits. Trump’s tax cuts, especially the sharp reduction in the corporate tax rate to 21 percent from 35 percent, took a big bite out of federal revenue. The CBO estimated in 2018 that the tax cut would increase deficits by about $1.9 trillion over 11 years.
Meanwhile, Trump’s claim that increased revenue from the tariffs would help eliminate (or at least reduce) our national debt hasn’t panned out. In 2018, Trump’s administration began hiking tariffs on aluminum, steel, and many other products, launching what became a global trade war with China, the European Union, and other countries.
The tariffs did bring in additional revenue. In fiscal 2019, they netted about $71 billion, up about $36 billion from President Barack Obama’s last year in office. But although $36 billion is a lot of money, it’s less than 1/750th of the national debt. That $36 billion could have covered a bit more than three weeks of interest on the national debt — that is, had Trump not unilaterally decided to send a chunk of the tariff revenue to farmers affected by his trade wars. Businesses that struggled as a result of the tariffs also paid fewer taxes, offsetting some of the increased tariff revenue.
As of Dec. 31, 2020, the national debt had jumped to $27.75 trillion, up 39 percent from $19.95 trillion when Trump was sworn in. The government ended its 2020 fiscal year with the portion of the national debt owed to investors, the metric favored by the CBO, around 100 percent of GDP. The CBO had predicted less than a year earlier that it would take until 2030 to reach that approximate level of debt. Including the trillions owed to various governmental trust funds, the total debt is now about 130 percent of GDP.