March 30, 2017

Trump's Troublesome Tweet on the Debt

President Trump’s Saturday morning tweet on the national debt left many budget watchers scratching their heads about its dubious factoid and irrelevant comparison.

Here’s what Trump said:

“The media has not reported that the National Debt in my first month went down by $12 billion vs a $200 billion increase in Obama first mo.”

The facts are accurate but meaningless.

Trump correctly claims that the debt went down in his first month as president. There are, however, two problems with this claim. First, the time frame is totally arbitrary. The debt number can fluctuate widely on a day-to-day basis. For example, from January 10 to January 12 this year the debt fell by $22 billion. On the other hand, from January 13 to January 18 it rose by $21 billion.

As Keith Hennessey, former director of the National Economic Council under President George W. Bush, noted, if Trump had “ended his timeframe one day earlier this tweet would have been invalid and debt would have increased (by just $1 B) in ‘the first month.’ ”

Beyond that is the fact that Trump has not done anything yet that would have an effect on the debt. The numbers he cites are not indicative of any actions on his part but merely of the fact that he inherited a more favorable situation from President Obama than Obama inherited from President Bush.

An even bigger problem with Trump’s tweet is that it sets up an irrelevant comparison with Obama’s first month in office. Obama took office with an economy in free-fall. Revenues were plunging and federal support payments for items such as unemployment compensation were surging in response to the Great Recession.

By contrast, Trump took office with the economy growing and the unemployment rate holding steady at just below 5 percent. This fact alone makes any comparison of the debt totals in the first month of the two administrations an apples-to-oranges proposition.

We will have to wait many months, if not years, to see what effect Trump’s fiscal policies have on the debt. Budget trends take time to develop. They are not shown by one-month comparisons taken out of context. What we do know is that the Congressional Budget Office projects steadily rising deficits and debt over the next 10 years under current law.

Trump will soon have an opportunity in his upcoming budget to show how he plans to enact large tax cuts and spend more on defense, infrastructure and border security while improving the budget outlook.

The relevant comparison for his budget is not with Obama’s first term but with current projections that show the total debt rising from roughly $20 trillion now to $30 trillion over the next 10 years. There will be plenty of time for self-congratulatory tweets if he can improve on that unsustainable trend.

In the meantime, it is unsettling that the president would think such a meaningless factoid is worthy of public attention. Credibility on the numbers is a valuable and fragile commodity.