Trump Seeks Praise on Debt; Economists Say Not So Fast
Trump Seeks Praise on Debt; Economists Say Not So Fast
(Bloomberg) -- President Donald Trump asked on Twitter why the media hasn’t reported that the national debt has dropped since his inauguration. One explanation, some economists said: Trump couldn’t have had anything to do with it.
“Anything that has happened to the debt has been on autopilot since Obama left," said Laurence Kotlikoff, an economics professor at Boston University. “If anything, he is taking credit for something Obama did."
The president took to Twitter on Saturday morning to say that the national debt declined by $12 billion in his first month in office compared with a $200 billion increase in Barack Obama’s first month in office. The tweet followed a Fox News segment on which former presidential candidate Herman Cain made the same statement.
Trump’s numbers are accurate. The national debt of $19.9 trillion did decrease $12 billion -- six-hundredths of 1 percent -- from his first day in office until his 30th. It’s also true the debt fluctuates by billions of dollars each day, and the current spending and tax revenue levels that drive those short-term variances were set by the last administration. Trump hasn’t had a chance in his first weeks to change the level of revenue collected through higher taxes or cut federal spending through a new budget.
The $14.4 trillion in debt held by the public, rather than as securities in government trust funds, was $94 million lower on Feb. 21 than on Jan. 20, when Trump was inaugurated. But the following day, the debt level popped back up more than $1 billion due to regular changes in spending and revenue.
“We applaud the president for focusing on the debt as an important metric of success and economic health, but would point out that the improvement this early in his term has to do with normal fluctuations in spending and revenues rather than new policies he has implemented," said Maya MacGuineas, president of the Committee for a Responsible Federal Budget.
A White House spokesman wasn’t immediately available for comment.
Former President Barack Obama took office during the biggest financial crisis since the Great Depression. Tax revenue was falling and the U.S. was taking on debt to try to get the economy out of a tailspin, Kotlikoff said.
Trump said this week that his team has “enormous work to do” to assemble a federal budget that will bring down deficits and deliver on priorities such as a military buildup, public infrastructure investments, expansion of immigration enforcement and tax cuts.
His administration is also working on a tax plan that it has said would be revealed by early March that will revamp business taxes. Trump may give further details on both in his joint address to Congress Tuesday.
While it is too soon to project Trump’s impact on the debt, the Council on Foreign Relations expects the debt will grow under Trump given his pledge not to cut entitlements, to increase spending on defense and infrastructure, and to cut corporate taxes.
To contact the reporter on this story: Shannon Pettypiece in New York at spettypiece@bloomberg.net.
To contact the editors responsible for this story: Alex Wayne at awayne3@bloomberg.net, Bernard Kohn, Gregory Mott