An exercise

I just want to see a number. I want to see where the federal debt would be, if we make allowance for federal responses to the Savings and Loan Crisis, the Great Recession, and the pandemic.

The Savings and Loan Crisis (2.2% of 1989 GDP)

Wikipedia says

The savings and loan crisis ... was the failure of approximately a third of the savings and loan associations (S&Ls or thrifts) in the United States between 1986 and 1995... The total cost [to] taxpayers by the end of 1999 was $123.8 billion...

And the FDIC Banking Review Vol 13, No. 2 says

It has been more than a decade since enactment of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), which began the taxpayers’ involvement in the cleanup of the savings and loan industry.

The Great Recession (5.7% of 2009 GDP)

Forbes of 17 Feb 2020 says

Exactly 11 years ago today, February 17, 2009, President Obama signed the American Recovery and Reinvestment Act of 2009 or the Recovery Act into law. The $831 billion in spending kicked off the longest period of economic growth and job creation in American history.

Heritage Foundation of 24 March 2020 says

In the wake of the housing meltdown and financial crisis, Congress passed the largest stimulus-spending package in American history... Vice President Joe Biden barnstormed around the country in 2010 promising a “Summer of Recovery” that never came.

He "barnstormed around"??

And of course Heritage, a nonpartisan, nonprofit charity, says

Keynesian stimulus almost always fails, and often makes the downturn worse and the eventual recovery weaker.

without any recognition of the financial roots of the 2009 recession or that "financial recessions are particularly problematic" -- as Google's AI Overview says:

Yes, financial recessions, stemming from issues in the financial markets, tend to be more severe and costly than those caused by other factors, often leading to significant economic downturns and lasting damage.

The Forbes article calls it the longest recovery. Heritage calls it the slowest. I love the irony.

The COVID-19 Pandemic (21.8% of 2020 GDP)

Investopedia says

According to official U.S. government tallies as of July 31, 2024, the U.S. had spent a total of $4.65 trillion on a variety of programs related to COVID-19 relief.

Adjusting the Federal Debt

I start with the FRED's FYGFD, an annual measure of the federal debt. To adjust for the Savings and Loan crisis I subtract $123.8 billion from the FYGFD number for 1989. This makes the federal debt falsely low for most of a decade. But it self-corrects by the end of 1999 because all that money was borrowed and spent by then. From 1999 to 2009, adjusted debt runs on the low side of the FRED data.

From the federal debt for 2009 I subtract the $831 Billion of the 2009 response to the Great Recession. Again, I let the passing years correct my lazy assumption that the whole 831 was spend in one year. After a decade, I figure, that money was all spent, and my number is a good estimate again.

And from the federal debt for 2020 I subtract the $4.65 Trillion COVID response. As that money was all spent by mid-2024, I figure my estimate is right by that date.

Without those three responses to economic crises, the federal debt would now be about
equal to GDP, some 20 percent of GDP less than it actually is. For what that's worth.

Yeah, I know: The graph ends in 2023. I know. But this is only an estimate, and now I have seen it.

I guess the government didn't "have to" rescue the economy those three times in the past 36 years. But if we did nothing, we might still today be in the middle of a Depression caused by the Savings and Loan mess.

That's okay. Trump is hard at work creating the next one.