I’m still puzzling over the graph in this post showing the massive increase in debt in all sectors that began during the 1990s. Why the sudden bump in public debt? I thought that we balanced the budget during the Clinton Administration.
I’m open to suggestions. The only explanation I can come up with is that we were at very nearly full employment at that time which means that we were taking in a lot of FICA revenue. By law whatever Social Security revenue is not disbursed in the form of Social Security benefits is put into Treasuries. That of itself would increase the debt even if the budget were at or near balance. I guess I’d need to go back into old Social Security Trustees’ reports to quantify that but it’s a start at an explanation. Any others?
Update
Aha! I misread the captions on the graph. My eyes aren’t what they used to be and the graph is a little fuzzy. The bump is in the 80s and it makes sense: the buildup of the military during the Reagan Administration coupled with the rewrite of the tax code. Not to mention Social Security running in the red for a bit until they revamped FICA.
The bump in blue looks like the 91 recession, the gradual increases in GSE and personal are probably housing…………….and financials same?
Note that the skinnying down in blue from the mid-90’s on is probably dot com and the 94 Congress.
The 80’s bump could also be attributed to reduced interest rates from the previous decade.