In spite of the fact that President Trump took over with nearly $20 trillion of debt and the related interest payments on the debt, and in spite of the Federal Reserve (FED) under Janet Yellen increasing interest rates by a full 1 percent since the election, President Donald Trump’s first year debt is $1.1 trillion less than Obama’s.
The US Debt since President Trump was inaugurated on January 20th through the end of the year increased by only $546 billion. On inauguration day the debt was at $19.9 trillion and on December 28th, 2017 the debt stood at $20.5 trillion. The US Debt has risen by $564 billion since President Trump’s inauguration on January 20, 2017.
Although a half a trillion dollars is a lot of money added to the debt it is a fraction of what President Obama added during his first year in office.
Obama during the same time period in his first term also increased the US Debt.
However, where President Trump increased the Debt to date by only 2.7%, Obama increased the debt by 15.9% or 13.2% more than President Trump.
President Obama inherited a US Debt amount of $10.6 trillion on his inauguration and increased it by nearly $1.7 trillion by the end of his first year in office.
Obama increased the US Debt amount by $1.1 trillion more than President Trump by the end of their respective first years in office.
President Trump has been able to limit the amount of new debt in spite of the massive increase in debt from Obama ($10 trillion) and the rising interest rates initiated by the Fed.
Right after Barack Obama was elected President, on December 16, 2008, the Federal Reserve (The Fed) lowered the Fed Funds rate by an entire percent, from 1% down to 0 %. The Fed had not lowered the Fed Funds rate by such a large amount (1% ) since at least before 1990, if ever. The Fed kept this 0% rate for most of Obama’s eight years in office.
CNBC reported in December 2015 that President Obama oversaw “seven years of the most accommodative monetary policy in U.S. history” (from the Fed). The Fed Funds rate was at zero for most of Obama’s time in office. Finally, in December 2015 after the Fed announced its first increase in the Fed Funds rate during the Obama Presidency.
The only Fed Funds Rate increases since 2015 were after President Trump was elected President. The Fed increased the Fed Funds Rate on December 14, 2016, March 15th, 2017, June 14, 2017, and again on December 13, 2017. Four times the Fed has increased rates on President Trump after doing so only once on President Obama.
The Fed Funds Rate greatly impacts the economy:
Lower interest rates usually spur the economy by making corporate and consumer borrowing easier. Higher interest rates are intended to slow down the economy by making borrowing harder.
If the Federal Reserve was political and wanted to prevent Republican Presidents from successful economic growth and debt decreases, then the Fed would increase the Fed Funds rates during Republican Presidents’ terms while decreasing the Fed Funds rates under Democratic Presidents’ terms.
This appears to be exactly what the Fed is doing.
Increases in the Fed Funds Rate increase the cost of borrowing and the largest borrower in the world is the US government. With $20 trillion in debt, a 1% increase in interest payments equals $200 billion in annual interest payment increases.
The Fed has increased interest rates by 1% since President Trump’s election win. With no increases in interest rates, President Trump would arguably have a balanced budget to date.
President Obama, on the other hand, benefited from the lowest possible interest rates possible for most of his eight years and in spite of this, nearly doubled the US Debt from $10 trillion to nearly $20 trillion.