I am a big believer the liability for the poor state of fiscal policy in the United States falls on the heads of both parties. Democrats and tax and spend while Republicans are borrow and spend. They both try to deflect blame and point the finger at the other. Cries of “we don’t control all the branches” and so on really fall on deaf ears for me. It is just so much nonsense I cannot believe it works for election campaigning. But it does. So let’s switch gears a bit and look at the political combinations and which are the worst for deficits.
A side note here for those that scream about the debt, addressing the debt requires tackling deficits and deficit spending so that debts can be paid down. Just whining about the debt, which is what most people with complaints about the debt seem to do (seriously, look and see if they have one concrete idea offered up about what to do, then ask if it is even remotely feasible from the perspective of political reality).
Data and Deficit Allocation Rules
The data are from the St. Louis FRED database and are from the monthly surplus and deficit measure. There is some $21 trillion in total deficit accumulated from February of 2001 until November of 2023 (the latest available date). This gives us three Republican presidential terms and three Democrat presidential terms, though the Biden term is still not completed so there are a few months fewer observations for Democrats as president.
That’s plenty of deficit to go around but here are my allocation decisions. First off, January after an election still goes to the sitting president from the year prior. Why? Inaugurations are late in the month and lag effects make it unlikely any changed policy regime would show up in data by that point. The two houses of Congress go to the parties taking power in that January. Could this still be an issue with lag effects? Sure. But this is the first pass at the analysis and I can test for robustness later.
First iteration
Let’s start with the basics. There was more than $21 trillion in deficits resulting from US fiscal policy since January of 2001. The data are surplus/deficit numbers so negative numbers are deficits, while positive numbers, only a few but they do exist, would be surpluses. The breakdown for this looks like the following:
| Presidential Party | $ Amount (millions) | Percentage |
|---|---|---|
| Republican | -9196211.776 | 43.5 |
| Democrat | -11944805.78 | 56.5 |
The breakdown is really close, close enough in fact that I am not really inclined to entertain any amount of effort to mitigate responsibility. Both parties are to blame. Is the argument that we only added $9 trillion compared to $12 for the other party really mitigation?
There are clearly several next steps to follow. First and foremost is the addition of the House and the Senate to the analysis. The combination of the Legislative and the Executive branch in the fiscal policy process is vital to understanding my central point: party does not matter when it comes to deficits. In fact this is the major conclusion I have so far: do not complain one party is creating deficits and your preferred one will not, you really just like the policies creating the deficit from one party more than the other.
