Bill Clinton surplus question

[Christa]

I am having a discussion with a rightwinger about the mess we are in. He claims the Clinton surplus was a myth, and sent me this link:

http://www.craigsteiner.us/articles/16

snip

Time and time again, anyone reading the mainstream news or reading articles on the Internet will read the claim that President Clinton not only balanced the budget, but had a surplus. This is then used as an argument to further highlight the fiscal irresponsibility of the federal government under the Bush administration.

The claim is generally made that Clinton had a surplus of $69 billion in FY1998, $123 billion in FY1999 and $230 billion in FY2000 . In that same link, Clinton claimed that the national debt had been reduced by $360 billion in the last three years, presumably FY1998, FY1999, and FY2000--though, interestingly, $360 billion is not the sum of the alleged surpluses of the three years in question ($69B + $123B + $230B = $422B, not $360B).

While not defending the increase of the federal debt under President Bush, it's curious to see Clinton's record promoted as having generated a surplus. It never happened. There was never a surplus and the facts support that position. In fact, far from a $360 billion reduction in the national debt in FY1998-FY2000, there was an increase of $281 billion.

snip

Any help will be appreciated.

edited for spelling.

[Oregone]

1. I thought it was a projected budget surplus...

Whatever projected means...so, as I thought, we were still in the red, but if the programs and budget he left continued, we would be in the black (federal budget, not deficit) in X amount of years.

[GOTV]

2. I did not read your link, but my understanding of the issue in general ...

... is that there are different ways of counting revenue and expenses in the government.

We have income taxes and payroll, or FICA, taxes. Income taxes, along with tarriffs and other sources are supposed to pay for the operation of government. FICA taxes are supposed to pay for Social Security.

For some time now administrations have taken the FICA money and used it to buy government bonds effectively putting the FICA money into the general pool used to pay government expenses.

Even after doing that many administrations still spend more than both revenue streams combined.

Clinton also used the FICA taxes to buy government bonds but actually brought government spending under the level of both sources of funding. That's a surplus because our federal income exceeded our expenses.

But some counter than since the FICA taxes are supposed to pay for SS, and will have to be paid back in a few decades, it's not really a surplus. The FICA taxes masked the hidden debt that existed under Clinton.

Either way, Clinton was far more fiscally responsible than any recent republican administration.

[JuniperLea]

3. I would just answer...

Too bad the very real and palpable Bush Depression isn't a myth.

[SoCalDem]

4. National debt, deficit, surplus..all wiggle-words

truth?
no one really knows because there are many ways to "explain it"..

Most of us deal in the real world, and we understand that if we owe $200K on a mortgage, $25K on a car loan, $8K on credit cards, and we have $5K in savings, we do not have a "$5K surplus" ..

Government types always use confusing terminology, because if they told us the truth, we would crap our pants and have a nervous breakdown:)

[hughee99]

5. According to this, the federal debt has gone up every year since 1969

See table on page 118/119 Section 7 - Federal Debt.

http://www.gpoaccess.gov/USbudget/fy06/pdf/hist.pdf

[GOTV]

9. The debt increased every year if you count internal as well as external debt ....

... external debt includes money we borrowed from foreign governments and bonds held by citizens. Internal debt is debt owed from one branch of the government to another like the money the government owes to the SS trust fund.

If you have a mortgage of 100K and your spouse borrowed 30K from you to buy a car, your total debt is 130K. As a unit you need to raise 100K to pay off your mortgage and your spouse needs an additional 30K to pay you.

[sorcrow]

6. Surpluses and deficits and debts

The debt and the deficit are fundamentally different.
The debt is the sum total of all the country owes.
The deficit is how much expenses exceed revenues in a yearly budget.
Similarly, the surplus is how much revenues exceed expenses in a year.

Think about an individual with a big debt. If he or she makes more than is spent in a year, the debt can be reduced. If earnings fall below expenditure, the debt will grow.

I would guess that under Clinton the debt shrank by $360 billion, not $422 billion because the interest on the debt continued to accrue.

If I am wrong, I'm sure 23 people will jump in to correct me.

Regards,
Sorghum

[Bolo Boffin]

12. This is it

The interest on the national debt allowed it to increase each year. What's commonly called the "deficit" is deficit spending each year over revenues. That IS something Clinton cut. If Clinton's budget cuts had been allowed to continue, the national debt itself would have been paid off. Already in 2000, you can see that the overall increase to the national debt was seriously curtailed.]

The conservative poster is comparing apples to oranges to pretend there was no surplus under Clinton.

[MiniMe]

7. Interest on the National Debt is a big part of it.

[theoldman]

8. Forget the arguments about the numbers.

Clinton was head and shoulders above Reagan and young Bush in managing the economy. Just look at the nations debt at the end of each administration. As long as it did not go up, the president was a success.

[GOTV]

10. Unfortunately the debt went up under Clinton too ...

... due to the horrendously bad financial situation he inherited from Reagan/Bush. It took almost the entire 8 years just to erase the deficit so we could start working on the debt, and then Bush happened.

[sandnsea]

11. It was a FICA "surplus"

and they gave it all away to the rich, and now they want to tell us they don't have money to pay our social security benefits.

And yes, it was a projected "surplus", not an actual in the bank surplus. That's how budgets work.

[hfojvt]

13. that appears to be correct

When Clinton entered office in 1993 the deficit was 255.1 billion. In his last year of office, 2000, the budget had a surplus of 236.4 billion. However, that does not include social security money. FICA taxes - FICA expenses go into a trust fund, which the government owes to working people. The trust fund is part of the total federal debt which went up from 1998 at 5.4787 trillion to 5.6061 trillion and to 5.629 trillion in 2000.

However, Clinton was telling the truth in that "debt held by the public" went down from 3.7216 trillion in 1998 to 3.4101 trillion in 2000. From a high of 3.772 trillion in 1997 to 3.4101 trillion in 2000, that is the 360 billion that the debt was reduced. It went down further to 3.32 trillion in 2001 before going back up under Bush. The table from SAUS 2002 is here
http://www.census.gov/prod/2003pubs/02statab/fedgov.pdf

[Still Sensible]

14. Nobody claimed a surplus in the national debt

that would have been utterly impossible. What is rightly pointed out is that when the Clinton administration ran surpluses, it was the first time since 1969 that we were not increasing the national debt. For at least his last two years in office, Clinton had a surplus.

[Romulox]

15. Clinton's "surplus" was based on spending Social Security funds (which must be paid back)

Your rightwing friend is right.

[Christa]

16. Thank you to everyone for clearing it up for me. nt

[Mr. Sparkle]

17. i dont understand his figures, at the end of his presidency Clinton reported a surplus of $559b