US National Debt: Republicans vs. Democrats

I keep getting annoyed when libertarians/conservatives say or imply that Republicans would do a better job than Democrats at dealing the US national debt. History shows this is patently false!

Of course, Republicans like to say this and somehow imply it’s true, but when it comes to economics what matters is not words, but numbers.

So, I did some calculations using the historical US National Debt numbers from investopedia.com. Starting in 1960, just before JFK was president, the National Debt went from $286 billion to $30.9 trillion at the end of fiscal year 2022. During that 62 years, there were 32 years with a Republican president and 30 years with a Democrat president. Looking at each year, I can calculate that during the 32 Republican years the National Debt increased by an average of 9.7% per year, while during the Democratic president years it increased by only 5.9% per year. Thus, Democrats are roughly twice as good as Republicans at not increasing the debt!

This, of course, makes complete economic sense. The US debt increases when government spending is larger than government income. Recently, Republicans, more than Democrats, have started/expanded expensive wars of choice (e.g. Iraq) increasing spending. And Republicans have often lowered the taxes on their extremely wealthy friends, thereby reducing government income. It is just common sense that Republicans are worse than Democrats regarding the US National Debt. This is shown in the Figure, where the debt caused by Reagan’s tax cuts stand out.

Now a yearly Republican increase of 9.7% compared to a Democrat increase of 5.9% might not sound like a big deal, but these numbers add up over 62 years. There are several ways to put this into perspective. The US debt under Republican presidents increased since 1960 by a factor of 19.4, while under Democrat presidents it increased by a factor of 5.6. This is a huge difference.

That is, if Republicans had been constantly in power since 1961, with their 9.71% yearly debt increase, then the US debt would now be $89 trillion, three times larger than our current $30.9 trillion debt. While if Democrats had been in power that whole time, the debt would be only $10 trillion, $20 trillion less than now! Actually, if Democrats had remained in power that whole time, the US debt might actually be zero, since they would not have lowered taxes on the wealthy so much. Those tax changes, mainly by Reagan (but also Bush and Trump), reduced government income permanently and therefore cause increases in the US debt for all presidents that follow.

Conclusion: If you are someone who cares about reducing the US debt, always support Democrats for president, and never support a Republican.

Frequently Asked Questions:

Question 1: Why start in 1960, isn’t that an arbitrary date?

Answer: I picked the time frame 1960 to present for a few reasons: Before 1914 there was no income tax and so funding the government was very different (mostly tariffs). The Great Depression and World War II were unique times and I wanted to avoid debts caused by those events. Starting in 1960 means I’m covering basically my whole life, and also gives an equal number of Republican and Democratic administrations. That makes comparisons easier and fairer. If one picks a small number of years, then one can get almost any answer you want by cherry picking the dates. So, I wanted a long, continuous (e.g. 62 year span) time span.

Question 2: Congress “holds the purse strings”, so aren’t they the ones responsible for the budget and national debt?

Answer: The budget is always a 3-way compromise between the House, the Senate, and the president. Typically, the process starts with the president sending his requested budget to congress. Then the Senate and House pass their versions of the budget, which often do not agree. Then there is a Senate/House conference committee to work out a compromise. Since the president holds veto power over the budget, he is usually very involved in this compromise, and holds a great deal of power over the final budget.

I note also that people tend to give the president credit or blame for what happens during their administration. Almost everyone calls the tax cuts on the wealthy done during the Reagan administration, the “Reagan tax cuts”, even though the House and Senate wrote the bill.

There is also some reason for thinking that, of the three, the president has the most power:

1. He is a single person, and doesn’t have to find a compromise between 435 House members or 100 senators.

2. He has a better “bully pulpit”, meaning he can more effectively make his case to the American public.

3. When a compromise is not found and the budget is not passed it can cause a partial shutdown of the federal government. In the past 50 years this has happened around 11 times. It was usually a conflict between the president and congress. In 9 of those 11 times the president won and got what he wanted, that is, congress caved in to end the shutdown. This has happened under both Republican and Democratic presidents. In the two cases where the president didn’t get exactly what he wanted, it was a compromise in which he still got some of what he wanted. For example, a recent example of such a “non-win” for the president was the shutdown over Trump’s demand for $5.7 billion for his Mexico wall. Eventually congress gave $1.375 billion. Yes, that increased the deficit.

Question 3: You mentioned that Republicans have lowered taxes for the wealthy more often than Democrats. I’ve heard that lowering taxes helps the economy, thereby increasing government income and more than paying for tax cuts.

Answer: This is common misconception often claimed by Republicans, libertarians, and conservatives. It is false. Recent careful research shows that tax cuts for the wealthy have no significant effect on the economy (as measured by the GDP), but do have the effect of transferring wealth from the middle class to the very wealthy (increasing economic inequality). One can see this easily in the Figure, where Reagan’s huge tax cuts for the wealthy in 1981 and 1986 were accompanied by the largest increases in the US National Debt of the past 70 years. This has been shown not only in the USA but in many other nations. For a careful discussion, calculation, and review, you can read the paper by Hope and Limberg, published by Oxford University Press: Economic Consequences of Major Tax Cuts for the Rich: https://academic.oup.com/ser/article/20/2/539/6500315?login=false