How to look good on paper aka National Debt as a percentage of GDP

I have to dispell a terrible myth that seems to be running around the entire country on every blog. My objective is to show how to look good on paper by viewing the National Debt as a percentage of GDP. Please understand that this is NOT a politically motivated writing, nor should it seem that I am specifically affiliated with any particular political party. If it matters to anyone in particular, I actually voted for him to be President.
In my humble opinion, the National Debt did NOT go down during President Clinton’s term in office. Did he have a budget surplus, YES! Did the debt go down while he was in office, NO! The devil is in the details, so please follow me in a we walk through some of the basic math here.

If you compare the National Debt as a percentage of GDP, like , it is merely doing basic division. Debt / GDP = n%.Using the math that most of us learned in elementary school, if you increase the GDP value on the bottom, then the percentage is automatically lower. To show by example, we’ll use the information from this spreadsheet provided courtesy of the Whitehouse: hist07z1.xls
Here is also the GDP, which you have to convert to millions to properly compare the data in the previous spreadsheet: us_gdp_history

In 1993, when William Jefferson Clinton came into office, the National Debt was about $4.35T (it was actually $4,351,044M but I’m rounding to make the numbers easier to work with). In 2001, when President Clinton was leaving office, the National Debt was $5.76T.
Now basic math shows us $5.76T – $4.35T = $1.41T increase over both of his terms in office combined.
In 1993 the National Debt was $4.35T, in 1997 when his second term began, the National Debt was $5.36T or a $1.01T increase for the first term.
In 1997 the National Debt was $5.36T, in 2001 when his second term ended, the National Debt was $5.77T or a $0.41T increase for the second term.
Did it go up more slowly, absolutely. Did the National Debt decrease, not a chance.

Now if you look more closely at the spreadsheet link above, you’ll notice that there was “technically” a decrease, but that is ONLY in the amount of debt that is stated as “Held by the public”. Can we use those numbers … well, not IMHO since any debt whether held “by the public”, or “held by the government” is debt that the country owes as a whole. Since WE are the public, and have to pay taxes to sustain the government with all it&s bells and whistles, the public owes the entire debt.

Just so I don’t seem like I’m attacking one political party, the same thing also occurred in the next Presidential terms when George W. Bush held the office of President (aka POTUS – President of the United States).

Real National Debt and as a Percentage of GDP
during Clinton’s Presidential terms
Year Nat’l debt GDP Nat’l debt / GDP
1993 4,351,044 7,085,200 61.41%
1994 4,643,307 7,414,700 62.62%
1995 4,920,586 7,838,500 62.77%
1996 5,181,465 8,332,400 62.18%
1997 5,369,206 8,793,500 61.06%
1998 5,478,189 9,353,500 58.57%
1999 5,605,523 9,951,500 56.33%
2000 5,628,700 10,286,200 54.72%
2001 5,769,881 10,642,300 54.22%

Footnote: GDP is an abbreviate for Gross Domestic Product

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2 Responses to How to look good on paper aka National Debt as a percentage of GDP

  1. I’m not going to pretend to be an expert on this, but debt as % of GDP would seem to be a more important number than the actual nominal value of the debt. Debt only really becomes a problem when that ratio gets too high. Just as if we were researching a stock, the $ value of the debt on their books isn’t important, but if they’re carrying around a really high debt/earnings ratio it might be a red flag.

    • I’m definitely not an expert on this, and I can see the point that from the perspective that you have.
      But there are still other factors that must keep that in check other than just this one ratio. For instance, what about the cost of maintaining the debt in comparison to the debt itself, or possibly the cost of maintaining the debt in comparison to how simple it is to simply create the money (potentially devaluing the dollar)?
      Debt does become a problem when more than just one ratio gets too high. Where would our country be if we all could decide to artificially adjust our own debt limitations at a whim?

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