Deficits, debts and Democrats versus Republicans: the US national debt by year and by president

Which party handles the national debt better is a question that gets asked every election and answered by whichever side is asking. The record, taken over sixty years and read without a rooting interest, is less tidy than either side would like. Two data series carry most of the weight, and this page sets out both, then the debt year by year and president by president, and then the reason the years after 2008 break the comparison.

Personal income under each party

The first series is Larry Bartels’s. The Princeton political scientist took income growth for families at each percentile of the distribution from 1948 to 2005 and sorted the years by the party of the president. At every percentile except the 95th, income grew faster under Democratic presidents than under Republican ones, and the advantage widened toward the bottom of the distribution: the poorer the family, the larger the gap. At the 95th percentile the difference was inside the margin of error, and above it the two parties’ records were indistinguishable. Slate’s summary of the chart, drawn by Catherine Mulbrandon for Visualizing Economics, put it as a question of whether greater equality could coexist with greater prosperity, and answered that on this evidence it could.

The obvious rejoinder is that Democrats bought that income growth with deficits. The second series is the test of that.

Debt as a share of the economy

Federal debt as a share of gross domestic product peaked at the end of the Second World War and then fell, almost continuously, for thirty-five years. Most of those years had Democratic majorities in both houses of Congress, and the fall continued under presidents of both parties. It stopped in 1981. Through the Reagan and first Bush administrations the ratio rose steeply, for the first time in peacetime, as large military increases met a Congress that would not cut social spending to make room for them; the gross debt roughly quadrupled between 1981 and 1993. Under Clinton the ratio fell again, helped by tax increases Republicans opposed, by spending restraint the Gingrich Congress deserves part of the credit for, and by the revenue of the late-1990s boom. In January 2001 the Congressional Budget Office projected that the United States was on course to retire its entire publicly held debt within a decade.

It did not. The second Bush administration cut taxes, fought two wars and added a prescription-drug benefit without paying for any of them, and the gross debt roughly doubled again. So on the plain reading of the second series, income grew faster under Democrats and debt grew faster under Republicans, at least from 1981 to 2008.

Year by year

The sequence is worth setting down without adjectives.

• 1980. Reagan campaigns during a recession in which debt as a share of GDP is flat. His central promise, presented with charts, is to balance the budget against deficits he says will bankrupt the country.
• 1981 to 1993. The largest peacetime deficits since the war. Gross debt quadruples.
• 1993 to 2001. A deficit-reduction plan passes Congress by a single vote; by 1998 the budget is in surplus. The 2001 CBO projection follows.
• 2001 to 2009. Tax cuts, Afghanistan, Iraq and Medicare Part D. Debt doubles. The financial crisis arrives in the final year, and the outgoing administration signs the bank rescue and budgets a deficit of about 1.3 trillion dollars for the year its successor will take office.
• 2009 onward. The Obama administration inherits that deficit and adds a stimulus to it; debt as a share of GDP rises faster than at any time since the war.

Why 2008 breaks the comparison

Anyone can see that the ratio soared under Obama, and it is fair to say so. It is not fair to score it against the earlier decades, because nothing in them resembles the years after 2008. The largest financial crisis since the 1930s began in the last year of a Republican administration, the bailout was a Republican president’s decision, made, in his own words, by giving up on his capitalist principles, and the tax cuts that had reopened the deficit stayed in place under his successor. There was, on the policy that matters for the debt, almost no change of course in 2009: the same emergency measures, the same central bank, the same tax code. A comparison that treats the crisis years as an ordinary presidency measures the crisis, not the party.

The honest conclusion is narrower than the one either party sells. Over the six decades for which the two series overlap, the party that ran the larger deficits was not the party that delivered the broader income growth. That is a fact about 1948 to 2008. It is not a law, and the years since have tested it in ways the original series could not anticipate.

Later note. Federal debt held by the public passed 100 per cent of GDP in 2020, under a Republican president and a pandemic, and stayed above it under his Democratic successor. Annual deficits in the 2020s ran above a trillion dollars in every year, in expansion as in emergency. The partisan pattern described above did not survive the decade in any form either party would care to claim.