The Federal Deficit under 'Divided Government'
The Government Accountability Office publishes a financial audit every November. The 2018 audit just came out and it’s titled: “Bureau of the Fiscal Service’s Fiscal Years 2018 and 2017 Schedules of Federal Debt.” One can find the audits at Treasury Direct on its Schedules of Federal Debt webpage. I’ve been reporting on these annual audits for a while now, and everything is much the same from year to year -- except for the numbers. The section we should pay special attention to is “Debt Held by the Public.”
In the 2018 audit, that section begins on page 21 where we read: “Of the marketable securities currently held by the public as of September 30, 2018, $9,230 billion, or 61 percent, will mature within the next four years.”
For a little perspective, on page 13 of the audit for 2008 we read: “Of the marketable securities currently held by the public as of September 30, 2008, $3,429 billion, or 66 percent, will mature within the next 4 years.”
In ten years, the projection for debt that “will mature within the next four years” has gone from $3.4T to $9.2T. It’s up $5.8T, or 2.7 times as much. The average maturing debt for each of the four projected years was $857 billion a decade ago, while the average today is around $2.3T. Consequently, the feds must now pay back $1.44T more each year than they were a decade ago.
But unlike 10 years ago, the feds must now roll over debt while interest rates are rising. Indeed, on page 19 of the 2018 audit, the interest expense on the public debt in 2018 is listed as $357B. That’s $61B higher than last year, and rates continue to rise. Look at these interactive charts to see how high 10-year treasury rates have been in recent years.
Republican John Boehner was Speaker of the House from January 2011 to October 2015. In Table 1.1 of the historical tables at OMB, we see that under Boehner the deficit went from -$1,299B in 2011 to -$438B in 2015. That’s an improvement of $861B in four years. From Speaker Pelosi’s record deficit of -$1,412B in 2009 to that deficit in 2015, nearly $1T was cut from the deficit, and the vast majority of it happened under Boehner.
But under Speaker Ryan, “Mr. Debt Crisis” himself, Congress reversed course and ran deficits of -$584B in 2016, -$665B in 2017, and -$779B deficit in 2018, an uptick of $341B over three years. That’s not so very bad when contrasted with the $1.252 trillion rise in the deficit in two years under Pelosi. But it’s still the wrong direction, and the projections are for the deficit to continue to grow.
Americans, we’re told, prefer divided government, where the elective branches are held by different parties. On matters fiscal, i.e. budgetary, divided government can work well. We had divided government for the last six years of Clinton’s tenure and in 1999 had an on-budget surplus for the first time since 1960. We also had divided government for the last six years of Obama, and huge improvements were made on the deficit, although we never got back to pre-Pelosi levels.
But we also had divided government during the last two years of President George W. Bush, and we slid into recession as the deficit exploded. And we had divided government for most of Bush’s first two years due to Republican Senator Jim Jeffords’ defection in May 2001 to caucus with the Democrats. The budget then went from surplus to deficit. So for the budget, divided government isn’t necessarily a good thing.
What folks need to notice is that the divided government that improved the deficit so dramatically under both Clinton and Obama involved Republican control of the House of Representatives. But that’s not the divided government America will be getting in January: the very party that ran the trillion-dollar deficits ten years ago will be back in control at the very time their debts are maturing. The American electorate has seen fit to hire arsonists to run the Fire Department.
Nancy Pelosi, “Miss Trillion-dollar Deficits” herself, is likely to again become Speaker. But don’t worry; Nancy ran on PAYGO in 2018, and promised to not let the deficit get any worse. Even so, all that the incoming Democrat caucus can talk about is new spending: Medicare for All, infrastructure, etc. etc. How can the Dems pay for all their new spending while abiding by PAYGO?
The first year of the “next four years” that the 2018 audit refers to is FY2019, which began October 1. That marked the tenth anniversary of the first of the four trillion-dollar deficits of Obama’s first term. According to our two annual audits, the debt held by the public has gone from $5.809T in 2008 to $15.761T in 2018. So in ten years, the hard debt grew by $9.952T. And here’s the thing: more than 92.7 percent of the debt run up in the last ten years must be paid back and rolled over in the next four years -- and this, while interest rates are rising.
Some may think that the failure to repeal ObamaCare might have cost Republicans control of the House in the 2018 midterms. But it was the Senate that put the quietus on ACA repeal, not the House, and the GOP Senate added to its ranks. Could Republicans have retained control of the House had they continued with the deficit reduction of Speaker Boehner?
We were having a grand old time during Obama’s reign. But the bill is coming due and we must pay up. The deficit should concern folks much more than it seems to. A good place to start learning about it is the aforementioned “2018 audit,” and there’s a link to it up top in the second paragraph.
Jon N. Hall of ULTRACON OPINION is a programmer from Kansas City.