By: Brian Evans
This past week it was reported that the GDP to debt ratio is now increasing due to a booming economy, leading to a reduction in America’s debt for the first time in more than a decade!
The Rex Sinquefield at Forbes in October of 2016:
The Obama recovery of the last seven years remains the worst in postwar American history. Average gross domestic product (GDP) growth since the bottom of the recession in 2009 was barely above 2.1% per year. The average since 1949 is well above 4% per year during the previous 10 expansions.
This result is not just bad, it is catastrophic. The average American should not be wondering if his or her income is a bit above or below 2007 levels. Just by historical averages, the average American should be 20% better off than in 2007. And this slow growth is settling in as a permanent new-abnormal.
I believe the root cause of abysmal growth is the huge tax increases imposed by Obama and the Democrats in Congress since 2008. The most harmful were the increase in the capital gains tax from 15 to 20 percent, the increase in top bracket income from 35 to 39.6 percent, and the new tax of 3.8 percent on investment income in the Affordable Care Act (ACA). The massive increase in regulatory burden through the ACA and Dodd-Frank bills are also crushing, but unfortunately are harder to measure.
The Gateway Pundit pointed out that…
President Obama never reached an annual GDP Growth rate of more than 3.0%. No President over the past century had not ever been held to GDP growth rates of less than 3.0% until Obama. But President Trump averaged a better than 3% GDP last year.
More impressively, when comparing the amount of US Debt from the government’s daily report of debt to the amount of GDP from the current GDP release, the amount of debt to GDP is decreasing under President Trump (a very good thing).
The ratio of debt to GDP is decreasing drastically – from 105.3% when Obama was President to 103.2% at the end of the 2nd Quarter of 2019! (Note that Obama increased the Debt to GDP ratio by 30% over his first two years and more than 40% during his two terms in office. Also, under Obama the Fed kept rates at 0% for his first seven years!
If President Trump had the same luxury of a 0% interest rate as Obama the Debt to GDP would be much less because US debt would be $1 trillion less.
More than one trillion of the two trillion increase in debt under President Trump is due to the Fed’s increase in rates
Ultimately, the President has been able to cut regulations, give tax cuts to the hardworking American taxpayers, and use tariffs to force foreign competitors to play fair in the open market! As a result, the President’s policies have led to one of the greatest economic booms that America has seen, and now our national debt has begun to decrease for the first time since the 1990s!
Now, if only the Federal Reserve would stop trying to sabotage the economy, America would finally be able to begin paying down our national debt at an amazingly fast rate! Regardless, despite the Federal Reserve’s attempts to stifle the President’s economic success, the President forges ahead, and is making headway!