Currently at $19.4 trillion, the debt is projected to hit $20 trillion by Inauguration Day 2016, up from $10.6 trillion when Obama entered the White House on Jan. 20, 2009.
Put in perspective, it means Obama will have added to the debt as much as all previous 43 presidents have done cumulatively.
Among the many concerns is that the staggering increase in U.S. national debt evident over the past eight years has limited the ability of the federal economy to stimulate the economy. Typically, monetary policy has employed deficit spending, a tool popular with economists who follow Keynesian principles of economic theory.
Last June, the Congressional Budget Office issued a 2015 budget assessment that concluded soberly that the long-term outlook for the federal budget has worsened dramatically over the past several years, in the wake of the 2007-2009 recession and the subsequent slow recovery.
As a result, budget deficits rose, totaling $5.6 trillion in the five years between 2008 and 2012. Four of the five years had budget deficits larger in relation to the size of the economy than any budget deficit since 1946, the year immediately after the end of World War II.
Mandatory spending, largely for entitlement programs such as health care and contributory programs such as Social Security, now accounts for 60 percent of the federal budget, with no limit in sight. More than 60 percent of the growth in mandatory spending projected in 2016 was for health care programs, including Medicare and Medicaid.
The CBO further projected that federal expenditures would remain at 21 percent of GDP for the next few years, higher than the average of 20.2 percent over the last 50 years.
“Because of rising interest rates and growing federal debt held by the public, the government’s interest payments on that debt are projected to rise sharply over the next 10 years – more than tripling in nominal terms and more than doubling as a percentage of GDP, from 1.4 percent to 3 percent,” the CBO estimated.
Fed ends ‘quantitative easing’ policy
In October 2014, the Fed under Janet Yellen’s direction ended the policy of quantitative easing under which it had purchased $85 billion in Treasury bonds every month in 2013. The policy culminated in what turned out to be 37 consecutive months during which the Fed bought Treasury debt in an effort to stimulate the economy by keeping interest rates at or near zero.
Under the QE bond-buying spree, the Fed balance sheet ballooned to a record $4.48 trillion accumulated since announcing the first round of QE purchases in November 2008 just as outgoing President George W. Bush tried to deal with a systemic collapse of financial markets.