FACT CHECK: Is U.S. Debt The Size Of The Economy For The First Time Since World War II?
In a recent town hall event with Newsmax, former Vice President Mike Pence claimed the U.S. debt is the size of the economy for the first time since World War II.
Bidenomics is a complete failure and is robbing the pocketbooks of Americans. For the first time since World War II, America’s debt is the size of our nation’s economy.
We need commonsense and compassionate reforms to reduce the mountain range of debt that is facing our children… pic.twitter.com/RiLXlQmAm1
— Mike Pence (@Mike_Pence) October 18, 2023
A Federal Reserve report published on Oct. 18 found U.S. economic activity experienced little change over the last month and a half, despite tightness in the labor market and price increases, according to Reuters. The Federal Reserve described the economic outlook as “stable” or “having slightly weaker growth” in the report, which features surveys from 12 central bank districts, the outlet reported.
While discussing the economy with Newsmax hosts Rob Schmitt and Bianca de la Garza, Pence said President Joe Biden spent two trillion dollars “in the name of COVID-19,” which has resulted in the “worst inflation in 40 years.” The solution to fixing the economy, Pence claimed, is to “undo unnecessary spending and turn off about three trillion dollars in spending.”
“Bidenomics is a complete failure and is robbing the pocketbooks of Americans. For the first time since World War II, America’s debt is the size of our nation’s economy,” Pence captioned a clip of himself speaking at the event on his verified X account.
The national debt represents the “amount of money the federal government has borrowed to cover the outstanding balance of expenses incurred over time,” according to Fiscal Data provided by the U.S. Treasury Department. When spending exceeds revenue, a deficit occurs, and as the government experiences a recurring deficit, the national debt grows, the Treasury Department notes.
The national debt allows the government to pay for its programs and services and has, in the past, been influenced by major events such as the 2008 recession, the wars in Iraq and Afghanistan, and the COVID-19 pandemic. Current fiscal data provided by the Treasury Department places the national debt at $33.59 trillion in 2023, or around 122% of the national GDP when adjusted for inflation.
According to data compiled by The Balance, the U.S. national debt was $49 billion in 1941 when the U.S. entered World War II. The U.S. national debt increased as the war continued, reaching $72 billion in 1942, $137 billion in 1943, and $201 billion in 1944. By the time the war ended in 1945, the U.S. national debt hit $259 billion.
The data compiled by The Balance shows a debt-to-GDP ratio of 44% in 1941 when the U.S. entered World War II and a debt-to-GDP ratio of 114% in 1945 when the war ended. While the national debt is in part made up of “intragovernmental debt” owned by federal agencies, the public carries the largest portion of the national debt, The Balance indicates. (RELATED: Cenk Uygur Claims He’s Able To Run For President. Experts And The Constitution Say He Cannot Become President)
In addition to what the current data shows, the national debt was previously high in 2022. In October 2022, the national debt passed $31 trillion after previously passing $30 trillion in February for the first time. Data from the Bureau of Economic Analysis (BEA) shows U.S. gross domestic product (GDP) increased 2.2% in the first quarter of 2023 and increased 2.1% in the second quarter of 2023. The next round of data is expected to be released by the BEA on Oct. 26.
Experts told Check Your Fact that the “net debt” was approaching 98% of GDP, levels not seen since 1948.
Romina Boccia, the Director of Budget and Entitlements Policy at the Cato Institute, labeled Pence’s claim as correct and said public debt could double over the next 30 years without reforms in an email to Check Your Fact.
“Mike Pence is correct. The United States public debt is approaching the size of the United States economy at 98 percent of GDP. The United States hasn’t suffered public debt levels this high since 1948. Without reforms, public debt could double between now and 2053 (over the next 30 years),” Boccia said.
“Debt that is this high and growing drags down economic growth, reducing American incomes and innovation. It’s time for Congress to empower a fiscal commission with real authority to stabilize the growth in the debt before a more severe fiscal crisis occurs, wherein the United States could enter a debt doom loop with the threat of hyperinflation,” she added.
William Gale, an economic expert at the Brookings Institution, said Pence’s claim was “not an unfair statement,” even though it is “not literally correct.”
“The claim is not literally correct but it is not an unfair statement. Net debt rose to 99.8% of GDP in 2020 (e.g., while Trump was in office) and is still around 98%,” Gale said.
Bobby Kogan, the Senior Director of Federal Budget Policy at the Center for American Progress, concurred with Gale’s assessment.
“Debt held by the public was nearly 100% of GDP in 2020 but has since shrunk somewhat. That said, since 2001, more than 90% of the increase in the debt ratio, if you remove one-time emergencies responses to COVID-19 and recessions, stem from the Bush tax cuts, their bipartisan extensions, and the Trump tax cuts,” Kogan stated. “And 100% of the long-term projections of debt-ratio increases can be attributed to the Bush and Trump tax cuts.”
Gale also provided data showing federal debt at the end of the year, beginning in 1940. Net debt was 41.5% in 1941 and 103.9% in 1945. Estimated net debt for 2023, on the other hand, is 98.4%.
Check Your Fact has also contacted Pence’s campaign spokesperson and multiple other economic experts for comment. We will update this piece accordingly if responses are provided.