Perhaps the biggest symbol of Obama’s economic legacy is the national debt.
Currently at $19.9 trillion, it is projected to hit $20 trillion by Inauguration Day, up from $10.6 trillion when Obama entered the White House in 2009.
It means Obama will have added to the debt as much as all previous 43 presidents combined.
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Two graphs illustrate why many financial analysts are concerned.
The first shows the steep climb in debt under Obama.
The second shows the sharp rise in total U.S. credit market debt, including household debt and credit card debt, that has occurred since the 1980s. The total U.S. credit market debt hit a high of approximately 385 percent of U.S. Gross Domestic Product in 2009-2010 during the recession brought on by the collapse of the U.S. subprime mortgage market at the end of President George W. Bush’s second term in office.
The graph shows the ratio of total U.S. credit market debt to the GDP has fallen off in recent years, down to a current level of about 355 percent of GDP.
The drop-off has occurred only because household debt has been declining since 2010 while government spending has continued to rise.
Among the many concerns is that the staggering increase in U.S. national debt over the past eight years has limited the ability of the federal economy to stimulate the economy. Typically, monetary policy has employed deficit spending, a tool popular with economists who follow Keynesian principles of economic theory.
Last June, the Congressional Budget Office issued a 2015 budget assessment concluding that the long-term outlook for the federal budget has worsened dramatically in the wake of the 2007-2009 recession and the subsequent slow recovery.
As a result, budget deficits rose, totaling $5.6 trillion in the five years between 2008 and 2012. Four of the five years had budget deficits larger in relation to the size of the economy than any budget deficit since 1946, the year immediately after the end of World War II.
The CBO concluded that the federal debt held by the public nearly doubled during this period. In 2015, the federal debt held by the public was equivalent to 74 percent of U.S. GDP, a higher percentage than at any point in U.S. history, except for a seven-year period around World War II.
The CBO further projected that with the continued aging of the population and the rising of health-care costs, the federal deficit will grow from less than 3 percent of GDP in 2015 to 6 percent in 2040, at which point the federal debt held by the public would exceed 100 percent of GDP – a level considered by many traditional economists to be seriously detrimental to U.S. economic growth.