US National Debt Under Trump's Presidency: A Comprehensive Analysis

The public and private national debt of the United States under former President Donald Trump's presidency has been a subject of considerable scrutiny and debate. To fully understand this economic phenomenon, it's important to differentiate between various types of debt, including government and private debt, as well as internal and external debt. This article aims to provide a detailed analysis of how the US National Debt changed during Trump's tenure and its implications on the global economic landscape.

Distinguishing Types of Debt

Firstly, it is crucial to understand the differences between public and private debt, as well as between government and private debt. Public debt refers to the total amount of money the government has borrowed, while private debt encompasses all the borrowing done by individuals and corporations. Furthermore, internal debt pertains to the debt held within the country, whereas external debt includes obligations to foreign entities.

In Trump's era, the US government focused on expanding its borrowing capabilities and altering the debt landscape through various economic policies. The discussion often centers around whether these efforts led to a reduction or an increase in the national debt. A deep dive into the specifics of these policies reveals both the intentions and outcomes of the administration's approach to borrowing and spending.

Trump's Economic Plans and Their Impact

Contrary to popular belief, Trump never had a concrete plan to reduce the national debt. Instead, his ambitious economic agenda was centered around stimulating the economy through tax cuts and increased government spending. The rationale behind such measures was to expand the judiciary, particularly in collateral relations, which would not necessarily lead to a reduction in national debt.

According to calculations based on official material published by the Secretary Yellen, it was projected that the US government could reasonably manage a yearly revenue of several trillions of dollars. However, as we discuss later, this optimistic prediction was overshadowed by actual events.

Public Debt Analysis

The US national public debt, often referred to as the government's debt, saw a significant increase during Trump's presidency. To provide context, the public debt increased by an estimated seven trillion dollars within the first three years alone. This is not a reduction but, rather, a substantial increase in the national debt.

Let's break down some of the key figures: In absolute dollar amounts, the public debt is still climbing. Moreover, when considering the debt per capita, the public debt has increased by about $5,000 per person during Trump's term. It's important to note that this increase is not a comprehensive reflection of the government's financial health.

Examining the debt in terms of the debt-to-GDP ratio provides a more nuanced view. As of 2019, Japan held the highest public debt-to-GDP ratio at 234%, while the USA stood at 110%. Most European countries hovered around 90%, with Germany being significantly lower at approximately 55% of GDP. This comparison highlights the relative position of the US in terms of national debt compared to other major economies.

External Debt and Global Perspectives

Another significant aspect of national debt is external debt, which refers to the total public and private debt owed to non-residents. This measurement gives us a broader picture of a country's financial obligations and its relationship with the global economy. In 2019, the external debt of the US, UK, France, and Germany ranked as 1234 in terms of total dollars. However, when sorted by debt-to-GDP ratio, the US and Canada were the same, at about 115%, while the UK's ratio was astonishingly high at 313%.

A comprehensive table showing the external debt of various countries can be found on Wikipedia. A visual representation of US external debt as a percentage of GDP over the past years, taken from CEIC, clearly illustrates the impact of tax cuts in Trump's first year. The sharp uptick in 2017, followed by a decline in subsequent years, suggests that external debt may not have increased significantly due to these tax cuts.

However, it's worth noting that as the economy cools off and GDP growth slows, the debt-to-GDP ratio will likely rise. This could further exacerbate the national debt, making it riskier for the US to rely on borrowing as a means to stimulate economic growth.

Conclusion

The US national debt under Trump's presidency saw a substantial increase, with the public and external debt both rising. While tax cuts and increased government spending were intended to stimulate the economy, they also contributed to a growing national debt. As the global economic landscape continues to evolve, the risk associated with the national debt will need to be carefully managed.

For a deeper understanding of these economic issues, readers are encouraged to explore the resources referenced in this article and conduct their own analysis.