The Blaze, CNSNews mislead by comparing Aug. 2-5 debt increase to that of the 1950s
The Blaze, the conservative news and opinion website founded by former Fox News host Glenn Beck, reports on a claim that the Obama administration increased the national debt more in four days than the Truman and Eisenhower administrations did during the entire decade of the 1950s. The article, from the website CNSNews, was tweeted by Rep. Trent Franks (R-Ariz.) and other conservative leaders:
At the start of business on Tuesday, Aug. 2, according to the Daily Treasury Statement, the national debt subject to the legal limit was $14.293975 trillion. Obama signed legislation that day lifting the limit by as much as $2.4 trillion—with an initial and immediate increase in the limit of $400 billion. By the close of business on Friday, Aug. 5, according to the Daily Treasury Statement, the national debt subject to the limit had grown to $14.536130 trillion.
Over just four days, the debt had jumped $242.155 billion.
By contrast, according to the Bureau of the Public Debt, over the ten-year period from the end of fiscal 1950 to the end of fiscal 1960, the national debt grew from approximately $257.36 billion to approximately $286.33 billion—an increase of approximately $28.97 billion.
Using the Bureau of Labor Statistics inflation calculator, $28.97 billion in 1960 dollars equals $220.92 billion in 2011 dollars.
Thus, the $242.155 billion in 2011 dollars that the Obama administration increased the debt between last Tuesday and last Friday is more in inflation-adjusted terms than the combined debt increases of the Truman and Eisenhower administrations in the ten-year period from the end of fiscal 1950 to the end of fiscal 1960.
The figures in the article are accurate, although the author of the piece understates the amount of debt taken out during the 1950s by adjusting for the value of the dollar in 1960, and not adjusting for its value during each year in the 1950-1960 period. The claims made in the article are nevertheless misleading because they obscure the fact that any debt taken on from August 2-5, 2011, was done so in order to spend on programs and agencies whose budget was already authorized — and thus mandated — by an act of Congress.
Because the U.S. Treasury reached the debt ceiling on May 16, the budgetary obligations that accumulated during the weeks and months that followed had to be immediately paid for once the debt limit was raised. The fact that the Treasury immediately took on $242 billion doesn’t mean that the Obama administration arbitrarily took on that amount of additional debt during those four days. Rather, spending had already been authorized by Congress and the Treasury was obligated to pay for it with additional debt, or face the legal consequences of failing to do so.
In order to accurately compare the 2011 deficit with the deficit of the 1950s, it’s important to recognize that the government is currently taking in revenue at a much smaller proportion to GDP than it did in the 1950s, a fact that cannot be directly attributed to the Obama administration. The primary reason for decreased federal government revenue is the ongoing economic slump, with secondary reason being the 2001 and 2003 Bush tax cuts.
According to the Office of Management and Budget, federal government receipts averaged at 17.2 percent of GDP from 1950 to 1960, while in 2010, they were 14.9 percent of GDP. Federal tax revenue as a percentage of GDP is currently the lowest it’s been since the year 1950, after which it did not go below 16 percent until the year 2008, the start of the Great Recession.
As for spending, while it’s true that total federal discretionary spending averaged 17.6 percent of GDP in the 1950s and was a substantially higher 23 .8 percent in 2010, much of that can be explained by the one-time American Recovery and Reinvestment Act, the 2009 stimulus law, which is already phasing out. Discretionary spending is projected to shrink in proportion to GDP in 2011 according to the Congressional Budget Office(PDF). Of course, that leaves off mandatory spending programs like Social Security, Medicare and Medicaid. The latter two programs were created after the Truman and Eisenhower administrations, so including them in the comparison is also misleading.
The increase in debt during the August 2-5 period therefore reflects not an arbitrary effort on the part of the Obama administration to take advantage of increased borrowing authority, but rather a natural consequence of the profundity of the recession and the legal obligation to pay the costs of mandatory spending programs.