The sharp rise in the debt-to-GDP ratio in 2008-2009

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The sharp rise in the debt-to-GDP ratio in 2008-2009 was partly automatic due to the effect of declining income on government outlays and tax revenues, and partly due to an aggressive fiscal policy. The Great Recession led to a decline in income, which lowered tax revenues and increased government expenditures on programs such as Medicaid and unemployment benefits. In response to the recession, the government also implemented an aggressive fiscal policy, including stimulus spending and tax cuts, which further increased the debt-to-GDP ratio. Military expenditures and foreign aid expenditures were not the primary drivers of the increase in the debt-to-GDP ratio during this time period.

The Sharp Rise in the Debt-To-GDP Ratio in 2008-2009