United States public debt

Translations of this material:

into Russian: Государственный долг США‎‎. 6% translated in draft.
Submitted for translation by Dmitry013 03.08.2011

Text

The United States public debt is a measure of the financial obligations of the United States federal government and is presented by the United States Treasury in two components and one total:

Debt Held by the Public, representing all federal securities held by institutions or individuals outside the federal government, including that held by the Federal Reserve System and state and local governments;[1]

Intragovernmental Holdings, representing U.S. Treasury securities held in accounts which are administered by the federal government, such as the OASI Trust fund administered by the Social Security Administration; and

Total Public Debt Outstanding, which is the sum of the above components.[2]

The gross public debt increases or decreases as a result of the annual unified budget deficit or surplus. The federal government budget deficit or surplus is the cash difference between government receipts and spending, ignoring intra-governmental transfers. However, there is certain spending (supplemental appropriations) that add to the gross debt but are excluded from the deficit. The deficit is presented on a cash rather than an accruals basis, although the accrual deficit provides more information on the longer-term implications of the government's annual operations.[3]

Gross debt has increased over $500 billion each year since fiscal year (FY) 2003, with increases of $1 trillion in FY2008, $1.9 trillion in FY2009, and $1.7 trillion in FY2010.[4] As of June 29, 2011, the Total Public Debt Outstanding was $14.46 trillion and was approximately 98.6% of calendar year 2010's annual gross domestic product (GDP) of $14.66 trillion.[2][5][6] Using 2010 figures, the International Monetary Fund places the total U.S. public debt at 96.3% of GDP, ranked 12th highest against other nations.[7] Together with the budget deficit, this debt was one of the reasons given by Standard & Poor's to downgrade the United States' credit outlook to "negative" on April 18, 2011.[8]

The government budget deficit should not be confused with the trade deficit, which is the difference between net imports and net exports.

Currently, the date of December 16, 2009 marks the beginning of the only week long period in the history of the debt limit when the debt ceiling ever exceeded the statutory limit enacted by Congress. It was during this time that the treasury department invoked the use of "extraordinary accounting tools” that it could then use to give the government a range of $150 billion that it then used to pay its outstanding obligations.[9]

In the United States Congress there are currently a number of disagreements between Democrats and Republicans regarding the United States debt. On August 2, 2011, President Barack Obama signed into law the bipartisan Budget Control Act of 2011, averting a financial default.

History

U.S. federal debt held by the public, from 1800 to 1999

U.S. gross public debt between 1981 and 2012 (est.) as a percentage of GDP, with columns color coded by party in control of Congress. Presidential terms are identified at the top.

U.S. gross public debt between 1940 and 2010 as a percentage of GDP, broken down by presidential terms. Year numbers refer to end of the fiscal year (that is, each year tick points to October 1 [July 1 before 1977] rather than January 1 of its calendar year), with the rationale that the fiscal activities of the previous President and Congress impact the economy for some period of time after the January inauguration of the subsequent office-holders.

The United States has had public debt since its inception. Debts incurred during the American Revolutionary War and under the Articles of Confederation led to the first yearly reported value of $75,463,476.52 on January 1, 1791. From 1796 to 1811 there were 14 budget surpluses and only 2 deficits. The first dramatic growth spurt of the debt occurred because of the War of 1812. In the first 20 years following the War of 1812, 18 surpluses were experienced and the US paid off 99.97% of its debt.

The second dramatic growth spurt of the debt occurred because of the Civil War. The debt was just $65 million in 1860, but passed $1 billion in 1863 and had reached $2.7 billion following the war. In the following 47 years America returned to the practice of running surpluses during times of peace, experiencing 36 surpluses and 11 deficits. During this period 55% of the US national debt was paid off.

The next period of major growth in debt came during World War I, reaching $25.5 billion at its conclusion. It was followed by 11 consecutive surpluses and saw the debt reduced by 36%.

Social programs enacted during the Great Depression and the buildup and involvement in World War II during the F.D. Roosevelt and Truman presidencies in the 1930s and '40s caused the largest increase – a sixteenfold increase in the gross public debt from $16 billion in 1930 to $260 billion in 1950. When Roosevelt took office in 1933, the national debt was almost $20 billion; a sum equal to 20 percent of the U.S. gross domestic product (GDP). During its first term, the Roosevelt administration ran large annual deficits between 2 and 5 percent of GDP. By 1936, the national debt had increased to $33.7 billion or approximately 40 percent of GDP.[10] Gross debt relative to GDP rose to over 100% to pay for WWII.

After this period, the growth of the gross public debt closely matched the rate of inflation, tripling in size from $260 billion in 1950 to around $909 billion in 1980. Gross debt in nominal dollars quadrupled during the Reagan and Bush presidencies from 1980 to 1992. The net public debt quintupled in nominal terms. Gross debt relative to GDP declined after WWII, then rose during the 1980s as part of the Cold War. During the 1970s, debt held by the public declined from 28% of GDP to 26% of GDP. During the 1980s, it rose to 41% of GDP.

In nominal dollars the net public debt rose and then fell between 1992 and 2000 from $3 trillion in 1992 to $3.4 trillion in 2000. During the 1990s, debt held by the public rose to 50% and then was reduced to 39% by the end of the decade.

During the presidency of George W. Bush, the gross public debt increased from $5.7 trillion in January 2001 to $10.7 trillion by December 2008.[5] Under President Barack Obama, the debt increased from $10.7 trillion to $14.2 trillion by February 2011.[11] Debt relative to GDP rose due to recessions and policy decisions in the early 21st century. From 2000 to 2008 debt held by the public rose from 35% to 40%, and to 62% by the end of fiscal year 2010.[12]

Note: The second graph is in error. 1995, 1996, 2004 and 2005 Congresses had a Republican majority in both houses.

Valuation and measurement

Public and government accounts

Detailed breakdown of government holders of treasury debt and debt instruments used of the public portion.

The total or gross national debt is the sum of the "debt held by the public" and "intragovernmental" debt. As of February 2011, the "debt held by the public" was $9.6 trillion and the "intragovernmental debt" was $4.6 trillion, for a total of $14.2 trillion.[13]

The national debt is also described in terms of marketable vs. non-marketable securities. As of February 2011, total marketable securities were $9.0 trillion while the non-marketable securities were $5.2 trillion. Most of the marketable securities are Treasury notes, bills, and bonds held by investors and governments globally. The non-marketable securities are mainly the "government account series" owed to certain government trust funds such as the Social Security Trust Fund, which represented $2.5 trillion dollars in 2010.[13][14] Other large intragovernmental holders include the Federal Housing Administration, the Federal Savings and Loan Corporation's Resolution Fund and the Federal Hospital Insurance Trust Fund (Medicare).

Fannie Mae and Freddie Mac obligations excluded

Although not included in the debt figures reported by the government, the U.S. government has moved to more explicitly support the soundness of obligations of Freddie Mac and Fannie Mae, starting in July 2008 via the Housing and Economic Recovery Act of 2008, and the September 7, 2008 Federal Housing Finance Agency (FHFA) conservatorship of both government sponsored enterprises (GSEs). The on- or off-balance sheet obligations of those two independent GSEs was just over $5 trillion at the time the conservatorship was put in place, consisting mainly of mortgage payment guarantees.[15] The extent to which the government will be required to pay these obligations depends on a variety of economic and housing market factors. The federal government provided over $110 billion to Fannie and Freddie by 2010.[16]

Guaranteed obligations excluded

See also: Temporary Liquidity Guarantee Program and Exchange Stabilization Fund.

Starting in late 2008, the U.S. federal government is guaranteeing large amounts of obligations relating to mutual funds, banks, and corporations under several new programs designed to deal with the problems initiated by the late-2000s financial crisis. Guarantees are off-balance sheet and therefore excluded in the calculation of federal debt. The funding of direct investments made in response to the crisis, such as those made under the Troubled Assets Relief Program, are captured by the debt totals.

Unfunded obligations excluded

The U.S. government is committed under current law to mandatory payments for programs such as Medicare, Medicaid and Social Security. The GAO projects that payouts for these programs will significantly exceed tax revenues over the next 75 years. The Medicare Part A (hospital insurance) payouts already exceed program tax revenues and Social Security payouts exceeded payroll taxes in fiscal 2010. These deficits require funding from other tax sources or borrowing.[17]

The present value of these deficits or unfunded obligations is an estimated $45.8 trillion. This is the amount that would have to be set aside during 2009 such that the principal and interest would pay for the unfunded commitments through 2084. Approximately $7.7 trillion relates to Social Security, while $38.2 trillion relates to Medicare and Medicaid. In other words, health care programs are nearly five times as serious a funding challenge as Social Security. Adding this to the national debt and other federal commitments brings the total obligations to nearly $62 trillion.[18] However, these amounts are excluded from the national debt computation.

The Congressional Budget Office (CBO) has indicated that: "Future growth in spending per beneficiary for Medicare and Medicaid—the federal government’s major health care programs—will be the most important determinant of long-term trends in federal spending. Changing those programs in ways that reduce the growth of costs—which will be difficult, in part because of the complexity of health policy choices—is ultimately the nation’s central long-term challenge in setting federal fiscal policy."[19]

Measuring debt relative to gross domestic product (GDP)

2010 Budget: Total Debt $ and % to GDP 2000–2010

GDP is a measure of the total size and output of the economy. One measure of the debt burden is its size relative to GDP. In fiscal 2007, U.S. federal debt held by the public was approximately $5 trillion (36.8 percent of GDP) and total debt was $9 trillion (65.5 percent of GDP).[20] Debt held by the public represents money owed to those holding government securities such as Treasury bills and bonds. Total debt includes intra-governmental debt, which includes amounts owed to the Social Security Trust Funds (about $2.2 trillion in FY 2007)[21] and Civil Service Retirement Funds. By August 2008, the total debt was $9.6 trillion.[22]

Based on the 2010 U.S. budget, total national debt will nearly double in dollar terms between 2008 and 2015 and will grow to nearly 100% of GDP, versus a level of approximately 80% in early 2009.[23] Multiple government sources including the current and previous presidents, the GAO, Treasury Department, and CBO have said the U.S. is on an unsustainable fiscal path.[24] As the debt ratio increases, the exchange value of the dollar may fall. Paying back debt with cheaper currency could cause investors (including other governments) to demand higher interest rates if they anticipate further dollar depreciation. Paying higher interest rates could slow domestic U.S. growth.

Higher debt increases interest payments on the debt, which already exceed $430 billion annually as discussed below, or about 15 cents of every tax dollar for 2008.[25] According to the CIA Factbook, nine countries have debt to GDP ratios over 100% for 2010, the largest of which is Japan at approximately 225%.[26]

Further, a high public debt to GDP ratio may also slow economic growth. Economists Carmen Reinhart and Kenneth Rogoff calculated that countries with public debt above 90 percent of GDP grow by an average of 1.3 percentage points per year slower than less indebted countries. The public debt-to-GDP ratio in March 2010 is about 60 percent of GDP; CBO projects it will reach 90 percent around 2020 under policies in place in 2010. If growth slows, all of the economic challenges the U.S. faces will worsen.[27]

Calculating the annual change in debt

Comparison of deficits to change in debt in 2008

The annual change in debt is not equal to the "total deficit" typically reported in the media. Social Security payroll taxes and benefit payments, along with the net balance of the U.S. Postal Service, are considered "off-budget", while most other expenditure and receipt categories are considered "on-budget." The total federal deficit is the sum of the on-budget deficit (or surplus) and the off-budget deficit (or surplus). Since FY1960, the federal government has run on-budget deficits except for FY1999 and FY2000, and total federal deficits except in FY1969 and FY1998-FY2001.[28]

In large part because of Social Security surpluses, the total deficit is smaller than the on-budget deficit. The surplus of Social Security payroll taxes over benefit payments is spent by the government for other purposes. However, the government credits the Social Security Trust fund for the surplus amount, adding to the "intragovernmental debt." The total federal debt is divided into "intragovernmental debt" and "debt held by the public." In other words, spending the "off budget" Social Security surplus adds to the total national debt (by increasing the intragovernmental debt) while the surplus reduces the "total" deficit reported in the media.

Certain spending called "supplemental appropriations" is outside the budget process entirely but adds to the national debt. Funding for the Iraq and Afghanistan wars was accounted for this way prior to the Obama administration. Certain stimulus measures and earmarks are also outside the budget process.

For example, in FY2008 an off-budget surplus of $183 billion reduced the on-budget deficit of $642 billion, resulting in a total federal deficit of $459 billion. Media often reported the latter figure. The national debt increased by $1,017 billion between the end of FY2007 and the end of FY2008.[29] The federal government publishes the total debt owed (public and intragovernmental holdings) at the end of each fiscal year[30] and since FY1957 the amount of debt held by the federal government has increased each year.

Debt ceiling

See also: 2011 U.S. debt ceiling crisis.

Article I Section 8 of the United States Constitution gives the Congress the sole power to borrow money on the credit of the United States. From the founding of the United States through 1917 Congress authorized each individual debt issuance separately. In order to provide more flexibility to finance the United States' involvement in World War I, Congress modified the method by which it authorizes debt in the Second Liberty Bond Act of 1917.[31] Under this act Congress established an aggregate limit, or "ceiling," on the total amount of bonds that could be issued.

The modern debt limit, in which an aggregate limit was applied to nearly all federal debt, was substantially established by Public Debt Acts[32][33] passed in 1939 and 1941. The Treasury has been authorized by Congress to issue such debt as was needed to fund government operations (as authorized by each federal budget) as long as the total debt (excepting some small special classes) does not exceed a stated ceiling. Since 1979, the House of Representatives by rule has automatically raised the debt ceiling when passing a budget, except when the House votes to waive or repeal this rule.[34]

During President Obama's term starting on December 16, 2009 marks the only time in the history of the US debt that the debt ceiling was ever numerically exceeded. "Extraordinary accounting tools" were used at that time to meet the necessary federal obligations. [35]

The most recent[36] increase in the U.S. debt ceiling to $14.294 trillion by H.J.Res. 45 was signed into law on February 12, 2010.[37]

On Sunday, July 31, 2011, CNN and AOL reported that President Obama announced that an agreement had been hammered out; however, some leaders of Congress and members of Congress, both Democrats and Republicans, have not yet seen or fully read the deal. Both houses of Congress, and then President Obama, must approve the deal before it becomes law. Certain provisions regarding potential cuts to defense spending, Medicare/Medicaid, and Social Security are still being arranged and reviewed. Furthermore, the degree of powers given to the new committee (composed of equal numbers of Democrats and Republicans; it is known as the "Super Congress") to be established in the proposed legislation, and questions regarding what it would recommend or do regarding increasing taxes or making cuts, remain areas of further exploration. Congress also must decide whether it wants to proceed with a balanced budget amendment vote that would send to the states a potential amendment to the U.S. Constitution requiring the federal budget to be balanced every year, though there is some debate over how powerful the amendment should be in mandating that requirement. There is also a question among some members of Congress as to whether such a vote should even be attached to the debt ceiling vote, or dealt with later during overhaul of the tax laws- in the midst of an election season. It does appear that the potential deal will raise the debt limit in a manner that would keep the issue from returning until after the 2012 election, and members involved in the potential deal's formation have indicated it would save between $2.4 and $3 trillion dollars. President Obama has indicated it is a potential deal he can likely accept. Markets reacted positively to the news of a probable deal.

On August 2, 2011, President Obama signed the above bill after it was approved by both the House of Representatives and the Senate.

Ownership of debt

Estimated ownership each year through time.

Because a large variety of people own the notes, bills, and bonds in the "public" portion of the debt, the U.S. Treasury also publishes information that groups the types of holders by general categories to portray who owns United States debt. In this data set, some of the public portion is moved and combined with the total government portion, because this amount is owned by the Federal Reserve as part of United States monetary policy. (See Federal Reserve System)

As is apparent from the chart, a little less than half of the total national debt is owed to the "Federal Reserve and intragovernmental holdings". The foreign and international holders of the debt are also put together from the notes, bills, and bonds sections. To the right is a chart for the data as of June 2008:

Foreign ownership

Composition of U.S. Long-Term Treasury Debt held by foreign states, Nov. 2005-Nov. 2010. June figures are results of comprehensive Treasury Department surveys.

As of January 2011, foreigners owned $4.45 trillion of U.S. debt, or approximately 47% of the debt held by the public of $9.49 trillion and 32% of the total debt of $14.1 trillion.[38] The largest holders were the central banks of China, Japan, the United Kingdom and Brazil.[40] The share held by foreign governments has grown over time, rising from 25% of the public debt in 2007[41] and 13% in 1988.[42]

As of May 2011 the largest single holder of U.S. government debt was China, with 26 percent of all foreign-held U.S. Treasury securities.[43] China's holdings of government debt, as a percentage of all foreign-held government debt, have decreased a bit over the last year, but are up significantly since 2000 (when China held just 6 percent of all foreign-held U.S. Treasury securities).[44]

Major Foreign Holders of U.S. Treasury Securities, 2000-2010 Source: http://FutureofUSChinaTrade.com

Major Foreign Holders of U.S. Treasury Securities, June 2010-May 2011 Source: http://FutureofUSChinaTrade.com

This exposure to potential financial or political risk should foreign banks stop buying Treasury securities or start selling them heavily was addressed in a June 2008 report issued by the Bank of International Settlements, which stated, "Foreign investors in U.S. dollar assets have seen big losses measured in dollars, and still bigger ones measured in their own currency. While unlikely, indeed highly improbable for public sector investors, a sudden rush for the exits cannot be ruled out completely."[45]

On May 20, 2007, Kuwait discontinued pegging its currency exclusively to the dollar, preferring to use the dollar in a basket of currencies.[46] Syria made a similar announcement on June 4, 2007.[47] In September 2009 China, India and Russia said they were interested in buying IMF gold to diversify their dollar-denominated securities.[48] However, in July 2010 China's State Administration of Foreign Exchange "ruled out the option of dumping its vast holdings of US Treasury securities" and said gold "cannot become a main channel for investing our foreign exchange reserves" because the market for gold is too small and prices are too volatile.[49]

Forecasting the debt

Further information: United States federal budget

2010 Budget: Projected deficits and debt increases in President Obama's 2010 Budget.

GAO Simulation assuming current spending levels continue.

Tracking current levels of debt is a cumbersome but fairly straightforward process. Making future projections is much more difficult for a number of reasons. For example, before the September 11, 2001 attacks, the George W. Bush administration projected in the 2002 budget that there would be a $1.288 trillion surplus from 2001 through 2004.[50]

In the 2005 Mid-Session Review this had changed to a projected four-year deficit of $851 billion, a swing of $2.138 trillion.[51] The latter document states that 49 percent of this swing was due to "economic and technical re-estimates", 29 percent was due to "tax relief", (mainly the 2001 and 2003 Bush tax cuts), and the remaining 22 percent was due to "war, homeland, and other enacted legislation" (mainly expenditures for the War on Terror, Iraq War, and homeland security).

Projections between different groups will sometimes differ because they make different assumptions. For example, in August 2003, a Congressional Budget Office report projected a $1.4 trillion deficit from 2004 through 2013.[52]

However, a mid-term and long-term joint analysis a month later by the Center on Budget and Policy Priorities, the Committee for Economic Development, and the Concord Coalition stated that "In projecting deficits, CBO follows mechanical 'baseline' rules that do not allow it to account for the costs of any prospective tax or entitlement legislation, no matter how likely the enactment of such legislation may be." The analysis added in a proposed tax cut extension and Alternative Minimum Tax reform (enacted by a 2005 act), prescription drug plan (Medicare Part D, enacted in a 2003 act), and further increases in defense, homeland security, international, and domestic spending. According to the report, this "adjusts CBO's official ten-year projections for more realistic assumptions about the costs of budget policies", raising the projected deficit from $1.4 trillion to $5 trillion.[53]

The 2010 Budget proposed by President Barack Obama projects significant debt increases, both in terms of dollars and relative to GDP.[54][55] The debt was projected to nearly double to $20 trillion by 2015, but was expected to increase to nearly 100% of GDP by 2020 and remain at that level thereafter. The estimates assumed real GDP growth (after inflation) ranging from 2.6% to 4.6% annually from 2010 through 2019, which exceeds Blue Chip consensus estimates.[56] These 2009 projections were subject to revision as the debt had in fact reached about 96.5% of GDP by FY2011, much earlier than 2020.

During FY 2008, approximately 76.6% of federal spending was in the following categories: Departments of Health and Human Services (19.8%), Defense (20.3%) and Veterans Affairs (11.8%); Social Security Administration (18.2%); interest on the public debt (6.6%).[17]

The Office of Management and Budget forecasts that, by the end of fiscal year 2012, gross federal debt will total $16.3 trillion. Thus, the projected debt will equal 101% of projected gross domestic product, which represents a milestone in the U.S. economy. Public debt alone, which excludes amounts that the government owes its citizens via various trust funds, will be 67% of GDP by the end of fiscal 2012.[57]

Historical analysis of government spending or debt relative to GDP can be misleading, according to the GAO, CBO and Treasury Department. This is because demographic shifts and per-capita spending are causing Social Security and Medicare/Medicaid expenditures to grow significantly faster than GDP. If this trend continues, government simulations under various assumptions project mandatory spending for these programs will exceed taxes dedicated to these programs by more than $40 trillion over the next 75 years on a present value basis.[58]

According to the GAO, this will double debt-to-GDP ratios by 2040 and double them again by 2060, reaching 600 percent by 2080.[59] A GAO simulation indicates that Social Security, Medicare, and Medicaid expenditures alone will exceed 20% of GDP by 2080, which is approximately the historical ratio of taxes collected by the federal government. In other words, these mandatory programs alone will take up all government revenues under this simulation.[58]

CBO Long-Term Scenarios

CBO-Public Debt Under "Extended" and "Alternate" Scenarios

The CBO reported during June 2011 two scenarios for how debt held by the public will change during the 2010-2035 time period. The "extended baseline scenario" assumes that the Bush tax cuts (extended by Obama) will expire per current law in 2012. It also assumes the alternative minimum tax (AMT) will be allowed to affect more middle-class families, reductions in Medicare reimbursement rates to doctors will occur, and that revenues reach 23% GDP by 2035, much higher than the historical average 18%. Under this scenario, government spending on everything other than the major mandatory health care programs, Social Security, and interest on federal debt (activities such as national defense and a wide variety of domestic programs) would decline to the lowest percentage of GDP since before World War II. Under this scenario, public debt rises from 69% GDP in 2011 to 84% by 2035, with interest payments absorbing 4% of GDP vs. 1% in 2011.[60]

The "alternative fiscal scenario" more closely assumes the continuation of present trends, such as permanently extending the Bush tax cuts, restricting the reach of the AMT, and keeping Medicare reimbursement rates at the current level (the so-called "Doc Fix" versus declining by one-third as mandated under current law.) Revenues are assumed to remain around the historical average 18% GDP. Under this scenario, public debt rises from 69% GDP in 2011 to 100% by 2021 and approaches 190% by 2035.[61]

The CBO reported: "Many budget analysts believe that the alternative fiscal scenario presents a more realistic picture of the nation’s underlying fiscal policies than the extended-baseline scenario does. The explosive path of federal debt under the alternative fiscal scenario underscores the need for large and rapid policy changes to put the nation on a sustainable fiscal course."[62]

Causes of change in debt

2001 vs. 2009

Causes of Change in Federal Spending as % GDP 2001–2009 from CBO Data

Causes for Changes in CBO Forecasts.

According to the CBO, the U.S. last had a surplus during fiscal year (FY) 2001. From FY2001 to FY2009, spending increased by 6.5% of GDP (from 18.2% of GDP to 24.7%) while taxes declined by 4.7% of GDP (from 19.5% of GDP to 14.8%). The drivers of the expense increases (expressed as % of GDP) are Medicare & Medicaid (1.7%), Defense (1.6%), Income Security such as unemployment benefits and food stamps (1.4%), Social Security (0.6%) and all other categories (1.2%). The drivers of tax reductions are individual income taxes (?3.3%), payroll taxes (?0.5%), corporate income taxes (?0.5%) and other (?0.4%). The 2009 spending level is the highest relative to GDP in 40 years, while the tax receipts are the lowest relative to GDP in 40 years. The next highest spending year was 1985 (22.8%) while the next lowest tax year was 2004 (16.1%).[63]

2001 vs. 2012

The U.S. budget situation has deteriorated significantly since 2001, when the Congressional Budget Office (CBO) forecast average annual surpluses of approximately $850 billion from 2009–2012. The average deficit forecast in each of those years as of June 2009 was approximately $1,215 billion. The New York Times analyzed this roughly $2 trillion "swing," separating the causes into four major categories along with their share:

Recessions or the business cycle (37%);

Policies enacted by President Bush (33%);

Policies enacted by President Bush and supported or extended by President Obama (20%); and

New policies from President Obama (10%).

CBO data is based only on current law, so policy proposals that have yet to be made law are not included in their analysis. The article states that "President Obama’s agenda ... is responsible for only a sliver of the deficits", but that he "...does not have a realistic plan for reducing the deficit..."[64] Presidents do not, acting alone, have constitutional authority to levy taxes or spend money; all such proposals must originate in Congress, but the President has a veto over new laws, and his priorities influence Congressional action.[65]

Peter Orszag, the OMB Director under President Obama, stated in a November 2009 that of the $9 trillion in deficits forecast for the 2010–2019 period, $5 trillion are due to programs from the prior administration, including tax cuts from 2001 and 2003 and the unfunded Medicare Part D. Another $3.5 trillion are due to the financial crisis, including reductions in future tax revenues and additional spending for the social safety net such as unemployment benefits. The remainder are stimulus and bailout programs related to the crisis.[66]

The Pew Center reported in April 2011 the cause of a $12.7 trillion shift in the debt situation, from a 2001 CBO forecast of a cumulative $2.3 trillion surplus by 2011 versus the estimated $10.4 trillion public debt we actually face in 2011. The major drivers were:

Revenue declines due to the recession, separate from the Bush tax cuts of 2001 and 2003: 28%

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