The document discusses the history and current state of the U.S. public debt. As of November 2016, the debt was over $19.9 trillion, nearly double what it was in November 2008. Past administrations, including Reagan, Clinton, Bush, and Obama, pursued different strategies to manage the debt such as deficit reduction acts, stimulus packages, and quantitative easing. The Trump administration plans to focus on 4% GDP growth, trade reform, lowering interest payments on the debt, and budget cuts to entitlement programs to address the debt over the long run through policy changes rather than sole focus on debt reduction.

1. Berkeley C. Teate
11/15/2016
U.S. Public Debt: An ‘Executive’ Look
Introduction:
As of November 11, 2016, the United States’ national [public] debt is just above 19.9 trillion USD.
This numbers may not sound worrisome. However, using the ‘US Debt Clock’ webpage, click on the link
titled ‘Debt Clock Time Machine’ – return to November 11, 2008. The total public debt was just above
10.9 trillion USD. That means the public debt has nearly doubled in less than a decade. This brief essay
will attempt to answer how the United States has and should handle the public debt. It will look at what the
public debt is, the history of public debt in the United States, past administrative decisions that affected the
public debt, how the Obama Administration is handling the debt, and President-Elect Trump
Administration’s platform and policies for debt control. The essay will conclude with an assessment
providing economic analysis of the policies of the mentioned administrations, and suggestions based on
Elect-Trump’s policies for his upcoming term(s).
Main Body:
Definition:
To answer the question on how the US should handle the public debt, first those terms must be
understood. Each fiscal year, the executive branch of the US government proposes a federal budget to be
approved by Congress. This budget is a projected gross domestic product (GDP) for the upcoming year
based on total expenditures and estimated tax revenues. However, since the 1970s, the federal budget has
had more expenditures than revenues; accumulating a substantial debt. The federal ‘debt’ is the sum of
money a government owes at a particular point in time. This term is often wrongly mixed with ‘deficit’,
which is the difference between the amount of money a government spends, and the money a government
receives in taxes over a given period [i.e. a fiscal year]. When the government runs a deficit, the overall
federal debt grows; think of debt as an accumulation of deficits. Please refer to Tables A and B in the
Appendix for a breakdown of the public debt and deficit [as of November 11, 2016].
Development:
In addition to general definition, it is also important to understand how the United States let the
debt accumulate overall and in specific administrations. Historically, it was war that has kept the country
in debt up until The Great Depression. These wartime high debts were paired with record-high taxes on
citizens either in the form of income or sales taxes [on daily necessities]. Despite the misnomer that war
has boosts an economy, the Congressional Budget Office (CBO) provides a public debt to GDP ratio visual
that is difficult to contradict. Refer to Figure A in the Appendix.
It was The Great Depression which began the familiar role of government spending and economic
growth relationship known today. During the Roosevelt administration, as the role of government grew, so
did the peacetime debt. Now refer to Graph A in the Appendix for the Total Federal Debt per presidential
administration since FDR, reported by the White House Office of Management and Budget.1
Each of the
figures is a specific administration’s last fiscal year in office i.e. the Reagan Administration left office with
a 4.23 Trillion national debt figure. These numbers confirm the total debt has risen considerably since the
Carter Administration, with each contributing between 2 to 3 Trillion USD.
1
There are no official numbers prior to FDR, according to the White House OMB.

2. 2
Past Administrations:
It may sound like the administrations had few management policies, or thought the debt was
controllable. That is not the case. Looking more recently, under the Reagan Administration, a legislation
was enacted titled the ‘Balanced Budget and Emergency Control Act of 1985’. This act initiated automatic
spending cuts when the approved budget deficit began missing target numbers. Unfortunately, loopholes
permitted these targets to be changed prior to reaching the initial numbers. This resulted in the [Bush]
Administration adopting the Budget Enforcement Act (BEA) in 1990, which aimed to restrain government
growth. Essentially, rather than set a deficit level per department or overall, the BEA set expenditure limits
for entitlement programs and congressional action(s) through a system called ‘PAYGO’. Overall, the Act
reduced the fiscal deficit nearly $500 Billion over a four-year period, despite changes in executive
administration.1
What is important to take note of is both of these administrations focused on controlling
the deficit, rather than the overall debt.
Known today as The Great Recession, the George W. Bush Administration closed on an economy
whose GDP fell 4.3 percent [the largest decline in the postwar era], whose unemployment rate rose to 9.5
percent, and whose housing market prices fell 30 percent.2
While this is largely contributed to the housing
bubble burst in 2008, its pre-conditions were set during the [William ‘Bill’] Clinton Administration.
President Clinton successfully repealed the 1933 Glass – Steagall Act in 1999, allowing banks to bundle
mortgages and sell them on the open market as security investments. Simply put, it kept commercial banks
separate from investment firms – it separated Main Street from Wall Street. While this was designed to
‘fulfill the American Dream’ of owning a house, it resulted in a loss of mortgages, increased foreclosures,
and high contribution to both the public debt and private debt. To tackle the burst, the [George W.] Bush
Administration enacted the Troubled Asset Relief Program (TARP), a $700 Billion loan to major banks
through quantitative easing. To date, 97.8 percent of TARP Funds have been recovered [equating to $600
Million outstanding].3
While this affected the deficit for fiscal years 2008 – 2016, its contribution to the
overall debt is limited as its funds were long-term loans [which have been nearly repaid].
Current Administration:
It is important to understand that, as mentioned earlier, nearly half of the US public debt has only
been accumulated since 2008 under the Obama Administration. Look at Table C in the Appendix for a
fiscal year comparison of the public debt in FY 2008 to FY 2016. The differences that added to the total
debt are highlighted in ‘red’ for a total of just under $9 Trillion in eight years.
Looking back at the administrative actions discussed, executive administrations generally choose
to manage the national economy through stimulus or austerity packages. Commonly, republican
administrations have initiated austerity packages [as seen above], and democratic administrations have
initiated stimulus packages. A Stimulus package is designed to invest in the economy through direct
government spending in infrastructure, create tax incentives, and the expansion of entitlement programs.
An Austerity package, similar to that of the Eisenhower Administration, is designed to cut federal spending
and lower tax rates on both individuals and corporations. The Obama Administration response was to enact
the American Recovery and Reinvestment Act (ARRA) i.e. a stimulus package. Totaling $787 Billion [later
revised to $831 Billion], this was the largest fiscal expansion policy in the history of the United States.
Unlike the 2008 economic stimulus package (TARP), ARRA was not a loan but money provided to state
and local governments with no pre-conditions. This ‘free money’ resulted in the near doubled debt, and
high fiscal deficits for two full presidential terms.
Refer to Table C in the Appendix for an eight-year comparison of the deficits under the Bush and
Obama administrations as a percentage of the national GDP. Keep in mind TARP was enacted under the
Bush Administration in FY 2008, and ARRA was enacted in under the Obama Administration in FY 2009.

3. 3
Looking at Table D in the Appendix, the Obama Administration deficit is not in the billions – but
the trillions per fiscal year. That economic deficit had never been seen prior to this administration and its
stimulus policies. While the annual deficit decreased between the administrations, keep in mind the overall
debt continued to increase. According to the CBO, these decreases in deficit during the Obama
Administration are due to rapid revenue increases which contribute to tax revenue but do not play a role in
the total national debt.4
The CBO reports that in the same period that deficits fell by 66 percent, the total
debt [of GDP] grew by 69 percent.5
Therefore, strictly focusing on the deficit as the current administration
has marketed is not effective in management of the total national debt. The CBO completed a Federal
Budget paper which projects trillion dollar deficits by 2025, and a debt exceeding the size of the US
economy between 2030 and 2040. See Figure B in the Appendix for a deficit visual the CBO produced
In addition to the ARRA mentioned above, accounting for nearly $1 Trillion of the overall debt,
the Obama Administration has proposed never-before-seen annual budgets since taking office. Refer to
Table D in the Appendix for a re-projected table of figures, which includes expected expenditures and
revenues, provided by the 2017 White House Budget Assessment [by the Obama Administration]. It is
important to note that no total national debt figure was provided – only a public – held debt figure
approximately $5 Trillion below the current national debt. It is also important to understand that the
administration is projected a continued pattern of running a substantial deficit, while continuing to increase
expenditures federally.
President – Elect Administration:
Understanding where the United States is in terms of its public debt, as well as past administrative
actions, it is important to look at how the Elect-Administration plans to tackle the near $20 Trillion debt
and $590 Billion [FY 16] deficit our country currently holds. President-Elect Trump faces a GDP that has
not had above 3 percent GDP growth in eight years, government spending at 38 percent of GDP, and a 57-
member rival to the International Monetary Fund (IMF) including close allies like the United Kingdom,
Germany, and France [Asian Infrastructure Investment Bank i.e. AIIB].
Let’s look at Elect Trump’s economy platforms, which will provide policy grounds to move
forward.2
He wants to get the economy back to a 3.5 percent growth rate annually – with potential to reach
4 percent growth rate. In the seven years during the Obama administration, the real GDP grew only 2.1
percent in total – the lowest since the 1940’s. His platform states that each 1 percent in GDP growth provides
1.2 million jobs. Elect Trump wants to focus on a 1.5 percent growth rate. By focusing on GDP growth, a
total 18 million jobs can be added in two full presidential terms.6
It is important to remember, currently, the
labor force participation rate is at 62.8 percent – the lowest since the 1970’s under President Carter.7
This
rate is equivalent too approximately 14 million people who’ve left the labor force [that are still eligible to
work].
Elect Trump wants to implement an America-First trade policy, a regulatory framework which
drops corporate tax codes that are currently pushing private headquarters overseas. This framework also
limits the involvement of the United States in the Trans-Pacific Partnership (TTIP), which would lower
tariffs of 21 countries (similar to that of NAFTA). The long-term effects of these preferential trade
agreements would loosen regulations on international investment, further encouraging the movement of
labor and taxes overseas.8
Elect Trump also focuses on the concept of currency manipulation [identifying
China specifically], aiming to identify countries who distort international trade flows by artificially
lowering the cost of imports and raising the cost of exports.
2
All Platform Statements are based on President Elect Trump’s Economy Platform on his webpage.
https://www.donaldjtrump.com/policies/economy/

4. 4
Elect Trump is interested in a ‘Hamilton’ style economic method (referring to first Secretary of
Treasury Alexander Hamilton). He is focused on dropping creditor payments annually, rather than focusing
solely on lowering the overall debt or the fiscal deficit(s).9
While Hamilton did this through taxes, Elect
Trump is interested in tackling credit payments through lowering interest rates which are currently projected
to reach $500 billion in 2020 [currently projected to pay $250 billion in FY 2016] based on the 30-year
average of 5.5 percent.10
Elect Trump has also mentioned repurchasing debt, a common tactic in the
corporate world. This allows foreign holds to receive 80 or 90 cents to the dollar they are owed, rather than
a long-term failure to attain repayment.
Assessment:
Looking back at the initial question, how the United States has and should handle the public debt,
it is clear that individual administrations consistently vary through spending packages, tax choices, and
trade investment. Understanding where the Trump Administration is focusing its efforts, this will be a more
conservative assessment. Overall, a policy focus, rather than a debt-management focus, will be key in
grasping the public debt. It is virtually impossible to eliminate a $19 Trillion debt, with projected deficits
soon to be in the trillions themselves (refer to Table D). However, by focusing on policy changes in favor
of Elect Trump’s economy plans, the public debt can be addressed sensibly.
Let’s first focus on Elect Trump’s vision for a 4 percent growth rate. During the Clinton
Administration, Representative Newt Gingrich [who was at the time Speaker of the House] was able to
balance the budget in four years through tax revenue attained from [the creation of] new jobs, rejecting any
new social and/or entitlement spending, and cutting the Department of Defense (DoD) budget [by roughly
$150 billion].11
This bipartisan budget agreement showed that job creation, a singular focus of the Trump
Administration, must be paired not with spending reductions, but baseline budget cuts. Refer to Figure C
in the Appendix for a spending visual provided by the Office of Management and Budget.12
In 2015, defense
accounted for 16 percent of the federal budget. This figure breaks down to $528 Billion for defense and
international security. The expenses of the DoD alone nearly offset the entire FY 2016 deficit (refer to
Table A). Gingrich also enforced limited social and entitlement spending. Social Security saw its 80th
anniversary in 2015, and remains the largest attribution to the annual federal budget. In 2015, it accounted
for 24 percent of the budget, or approximately $888 Billion. If no policy changes are made, expenditures
will exceed tax revenues by almost 30 percent in 2040. The CBO contributed 36 separate policy options to
prevent these additional expenditures. The policy most beneficial for long-term reductions in budget
overlays includes: the adjustment of the current taxable USD amount (currently $118,500) to remain
constant with the average wage of an individual.13
This does not adjust the 12.4 tax amount per citizen, nor
does it remove the ‘income cap’; it merely stabilizes payroll taxes per fiscal year.
Referencing Elect Trump’s ‘America First’ trade policy, it would be wise to work with
Representative Paul Ryan [Speaker of the House] who was able to pass a bipartisan ‘Omnibus Bill’ in
February 2016 focused on debt management through policy change. Trump is currently focused on labeling
China as a currency manipulator, and presenting trade case violations to the World Trade Organization
(WTO). Rather than creating hostile relations with the country that controls the AIIB, a focus on global
elimination of currency manipulation would be more prevalent. Other countries in Southeast Asia, including
Japan and Singapore, are also known for trade corruption. This could be tackled through a push the TTIP,
including US membership, with pre-conditions and principal alterations. Currently, the TTIP doesn’t
include China, the strongest economic force in the Eastern Hemisphere. If the TTIP agreement were to
invite China to join the 22 other member countries [including the United States] with the pre-condition of
regulatory tools for currency manipulation, current trade deficits contributing to the public debt could be
prevented.
Currently, U.S. trade deficit with China has eliminated upwards of 2.7 million jobs in
manufacturing. That figure is equivalent to a deficit reduction between $190 billion and $400 billion, and

5. 5
an increase in the domestic GDP between $225 and $437 Billion through job growth.14
Legal tools to
prevent this include the threat of elimination of the purchase treasury bills between countries, as well as the
refusal to sell government assets or property to declared manipulators. While this may sound unappealing,
the benefit of joining the TTIP with these regulations is the known reduction of tariffs for corporations and
industry trade
Trump’s ‘Hamilton’ method of focusing on creditor payments through lowering interest rates on
the national debt, currently projected to grow from 1.4 percent to 5.1 percent [i.e. a $1 trillion inflation] is
a difficult topic nationally. 15
The United States currently owes $23 Billion in interest just accumulated in
2016 [on a $590 Billion deficit]. Sticking with policy changes to assist handling the debt, rather than a debt
management perspective, Elect Trump would be more inclined to partner with the WTO who currently
monitors tariffs of its member-states. Creditors are unlikely to negotiate with a singular nation i.e. Elect
Trump. The WTO states, “it achieves higher living standards, full unemployment, and sustainable
development through a reduction in tariffs and other obstacles to trade”.16
If the United States made a formal
proposal to the WTO proposing a short-term reduction in interest rates on the basis that they’re a current
obstacle to trade stimulation, the United States could likely cover 80 cents to the $1 owed to its creditors.
Moving forward, in addition to addressing the Trump Administration’s three large concerns on debt
management, the following are also strongly encouraged based on successful management of previous
administrations. The federal government is currently at 38 percent of domestic GDP in the United States.
Historically, debt was more manageable under 25 percent of domestic GDP. Looking back at the Gingrich
bipartisan budget in the late 1990’s, increasing tax revenue while cutting FY 2017 budgets rather than
reducing spending is historically successful. Perhaps by looking back at the H.W. Bush Administration’s
‘PAYGO’ plan, which reduced the deficit by $500 Billion in four years, Elect-Trump can manage adding
to the total national debt.
Lastly, Representative John McCain has been a vocal proponent of reversing the Clinton
Administration appeal of the Glass Steagall Act in 1998, a large proponent of the 2008 Housing Bubble
Burst. In fact, McCain worked with well-known Democratic Representative Elizabeth Warren to
reintroduce legislation that would force banks to split their investment and commercial practices. Currently,
the Dow Jones Industrial Average (DOW) is at 19, 097 – a record-breaking index high for the United
States.17
Record-breaking stock markets occurred prior to both The Great Depression and The Great
Recession – the later a direct effect of the repeal of the Act. To avoid another severe economic crisis, likely
to increase government spending [and the overall total national debt], Elect-Trump needs to address this
legislation seriously.
Conclusion:
This brief attempted to answer how the United States has and should handle the public debt. It
looked at what the public debt is, the history of public debt in the United States, past administrative
decisions that affected the public debt, how the Obama Administration is handled the debt, and President-
Elect Trump Administration’s platform and policies for debt control. The essay concluded with an
assessment providing economic analysis of the policies of the mentioned administrations, and suggestions
based on Elect-Trump’s policies for his upcoming term(s). These suggestions focused bipartisan policy
changes, enhanced by past administrative debt management choices: a 4 percent GDP growth rate, a
balanced trade policy [focused on deficit reduction], and interest rate alternatives to lowering creditor
payments. Currently, the United States’ national [public] debt is just above $19.9 trillion. On this path, the
United States is looking at an 800 percent increase of deficit levels, and a $30 trillion national debt. The
United States economy is not in good shape – without substantial policy changes, the country will likely
soon face its worst economic crisis to-date.

6. 6
Appendix:
Table A: Total Public Debt Breakdown
F/S/L Spending: Interest Paid: Foreign Held: FY 16 Deficit: Total USD:
Public: 6.702 Trill 2.519 Trillion 6.059 Trillion 590 Billion 19.905 Trill
Based on US Debt Clock webpage
Note: F/S/L stands for ‘Federal, State, and Local Spending’; Main Spending and/or Debt categories shown. Not all
debt accounted for in Table.
Table B: FY 16 Public Deficit Breakdown
US Federal
Spending
US Tax Revenue FY 2016 Deficit [Thus Far]
USD: 3.888 Trillion 3.295 Trillion +593 Billion
Percentage [%}: +117.00 +65.00 -
Based on US Debt Clock webpage
Figure A: 1790 to 1930, Debt to GDP Ratio
Source: Congressional Budget Office, The Atlantic, Matt Phillips
Graph A: Total Federal Debt per Administration in the 20th
Century

7. 7
Source: White House Office of Management and Budget and Council of Economic Advisers
Table C: FY 2008 FY 2016 Public Debt Comparison
F/S/L Spending: Interest Paid: Foreign Held: FY Deficit: Total USD:
FY 16: 6.702 Trillion 2.519 Trillion 6.359 Trillion 590 Billion 19.905 Trillion
FY 08: 5.780 Trillion 3.736 Trillion 2.969 Trillion 508 Billion 10.943 Trillion
Difference: +922 Billion -1.217 Trillion +3.390 Trillion +92 Billion +9 Trillion
Based on US Debt Clock webpage
Note: Main Spending and/or Debt categories shown. Not all debt accounted for in Table.
Table D: Executive Term Deficit Comparison
Year 1: Year 2: Year 3: Year 4: Year 5: Year 6: Year 7: Year 8:
Obama: -9.8% -8.7% -8.5% -6.8% -4.1% -2.8% -2.5% -3.3%
-1.41 Trill -1.28 Trill -1.26 Trill -1.04 Trill -637 Bill -447 Bill -399 Bill -616 Bill
Bush: 1.2% -1.5% -3.3% -3.4% -2.5% -1.8% -1.1% -3.1%
154 Bill -186 Bill -437 Bill -466 Bill -349 Bill -263 Bill -166 Bill -464 Bill
Difference: -11% -7.2% -5.2% -3.4% -1.6% -1.0% -1.4% -0.02%
-1.256
Trill
-1.094 Trill -823 Bill -574 Bill -288 Bill -184 Bill -173 Bill -152 Bill
Source: Federal Budget, Inside Gov. [http://federal-budget.insidegov.com/]
Figure B:
2.05 2.55
1.78 1.72 1.82 1.82 1.94 2.1
4.23
5.69
7.02
10.1
17.4
0
2
4
6
8
10
12
14
16
18
20
Debt(byTrillion)
U.S. Executive Administration
Total Federal Debt

8. 8
Table D: Budget Totals 2015 to 2025
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Budget Totals [in
Billions USD]
- Revenue 3,250 3,336 3,644 3,899 4,095 4,346 4,572 4,756 4,949 5,177 5,411
- Expenditures 3,688 3,951 4,147 4,352 4,644 4,880 5,124 5,415 5,626 5,827 6,152
- Deficit -438 -616 -503 -454 -549 -534 -552 -660 -677 -650 -741
Source: White House FY 2017 Assessment Budget
Figure C: FY 2015 Federal Exepnditures

9. 9
Sources:
1. U.S. National Debt Clock, http://www.usdebtclock.org/
2. The U.S. Federal Budget, Graphiq, Updated 2016, http://federal-budget.insidegov.com/
3. The Long Story of U.S. Debt, From 1790 to 2011, by Matt Phillips, The Atlantic, Published
November 13, 2012, http://www.theatlantic.com/business/archive/2012/11/the-long-story-of-us-
debt-from-1790-to-2011-in-1-little-chart/265185/
4. Fiscal Year 2017 Budget of the U.S. Government, Office of Management and Budget, The White
House, https://www.whitehouse.gov/sites/default/files/omb/budget/fy2017/assets/budget.pdf
1
https://www.aei.org/wp-content/uploads/2014/04/-fiscal-politics-and-the-budget-enforcement-
act_141846288746.pdf
2
http://www.federalreservehistory.org/Events/DetailView/58
3
https://www.treasury.gov/initiatives/financial-stability/reports/Pages/TARP-Tracker.aspx
4
http://crfb.org/sites/default/files/fy14_deficit_falls_but_debt_continues_to_rise.pdf
5
http://crfb.org/document/report-deficit-falls-486-billion-debt-continues-rise
6
http://www.cbpp.org/research/economy/chart-book-the-legacy-of-the-great-recession
7
http://data.bls.gov/timeseries/LNS11300000
8
https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/reports/51924-tradeagreements.pdf
9
http://www.theatlantic.com/business/archive/2012/11/the-long-story-of-us-debt-from-1790-to-2011-in-1-little-
chart/265185/
10
https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/reports/51129-
2016_Outlook_Summary.pdf
11
http://www.cnbc.com/2016/04/21/10-iconic-us-companies-that-have-moved-headquarters-abroad.html
12
http://www.cbpp.org/research/federal-budget/policy-basics-where-do-our-federal-tax-dollars-go
13
https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/reports/51011-SSOptions_OneCol-2.pdf
14
http://www.epi.org/publication/bp351-trade-deficit-currency-manipulation/
15
http://www.washingtontimes.com/news/2016/nov/14/government-spending-freeze-could-help-donald-trump/
16
https://www.wto.org/english/res_e/publications_e/wtocan_e.pdf
17
http://money.cnn.com/data/markets/dow/