Obama's federal debt dwarfs Reagan's

The Washington Post has an article with the following claim:

Obama's term isn't over, but it is hard to believe he could increase the debt by as large a percentage as Ronald Reagan did.

To arrive at this spurious conclusion, the Post apparently used non-inflation adjusted, non-seasonally adjusted raw total federal debt data from the Federal Reserve, and then proceeded to ignore normalization to either the size of the economy or population, and calculated the percent increase in this metric between January 1, 2009 and the latest data as of July 1, 2014 for Obama as compared to the percent increase between January 1, 1981 and January 1, 1989 for Reagan.

Using this intellectually flawed approach, one arrives at numbers of a 184-percent increase under Reagan and a 60-percent increase under Obama.

The absolute nominal value of the U.S. federal debt has no meaning whatsoever.  It is an effectively useless statistic.  By the Post's logic, having debt increase by 300 percent from $1 to $3 would be less desirable than having debt increase by 50 percent from $10 trillion to $15 trillion.  Factor in higher rates of  population growth, inflation, and economic growth under Reagan versus Obama, and it becomes obvious that nominal total debt comparisons are meaningless.  Let us not forget that real GDP growth in 1984 was 7.3 percent; the next-highest value since was just 4.7 percent in 1999.

The best metric is normalization to the size of the economy.  As is clear from the figure below, under Reagan the federal debt increased from 30.8 percent of GDP in January 1981 to 49.6 percent of GDP in January 1989, for a total increase of 18.8 percent of GDP.  By comparison, the federal debt under Obama has increased from 77.4 percent of GDP in January 2009 up to 101.3 percent of GDP as of the latest data release in July 2014, for a total increase of 23.9 percent.

Consequently, in order for Obama's debt increase to be no larger than Reagan's, Obama would need to reduce the federal debt by 5.1 percent of GDP between now and January 2017.

The other valid comparison is to look at per capita federal debt in constant dollar terms.  We can get at this number by multiplying the federal debt as a percentage of GDP (shown above) by real GDP in chained 2009 dollars and then dividing by the population. Via this approach, Reagan increased the real per capita federal debt by $8,584, whereas Obama has already increased the real per capita federal debt by $15,177.

Whichever way you look at it, Obama has already increased the federal debt far more than Reagan ever did.

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