Repman, please stop. You don't have a clue what you are talking about and it just sounds foolish. The yearly
National Budget and the total
National Debt are two completely different things that you are trying to conflate together. Clinton is correctly credited with balancing the yearly budget, and in fact creating a yearly budget surplus. At the time, the debate was whether it would be better to use that surplus to pay down some of the National Debt, or to give it back to the people with tax cuts. I remember specifically Alan Greenspan recommending tax cuts over paying down the debt. He was concerned about the effect on bond markets if U.S. Treasuries became scarce (since U.S. debt is considered the Gold Standard in the world of debt markets).
Since you bring up the National Debt, it is interesting to note that during Clinton's two terms, the National Debt as a percentage of GDP actually DROPPED, while during Bush's reign it spiked 20%!
Source
Since this article has become a popular reference for people debunking the myth of the Clinton surplus, I have seen a number of responses made by those that cannot seem to accept the fact that there was never a surplus. Some of those responses are listed here and I explain why the responses are invalid.
Adjusting the National Debt for Inflation or as % of GDP
A common tactic used by those that cling to the myth of the Clinton surplus seems to be showing a bar graph of the total national debt adjusted for inflation, or depicted as a percentage of GDP. When you adjust for inflation or show the debt as a percentage of GDP, it looks like the national debt went down for a year or two under Clinton. However, that does not mean Clinton had a surplus, it simply means inflation was increasing faster than the national debt or the economy was expanding faster than the national debt. That does not change the fact that Clinton never had a surplus.
Explained another way, adjusting the national debt for inflation is valid for comparing the debt load of the federal government but it has absolutely nothing to do with whether or not the federal government had a surplus a given year. If you spend more than you take in in a given year, you have a deficit even if your relative debt load went down because of inflation. Explained numerically, let's say you owe $50,000, earn $30,000, and spend $31,000 (debt load=50,000/30,000=167%)--that leaves you with a deficit of $1000 so that the following year you owe $51,000. The next year inflation is 5% so you now earn $31,500 and spend $32,550 with a deficit of $1,050. $31,500 in earnings with a $51,000 debt is a 162% debt load--so your relative debt load went down thanks entirely to inflation but you still had a deficit of $1,050 that year and your debt continued to grow.
It wouldn't be accurate to claim that you had a surplus because your debt load went down even though you spent more than you earned. That's what people are saying when they try to adjust the national debt for inflation to claim a surplus.
The bottom line is that the national debt going down as adjusted for inflation or as a percentage of GDP is a valid metric for evaluating the debt load of the government but it says nothing about whether or not there was a surplus. If the total national debt went up, there was a deficit. Those that think a decrease in the debt load of the federal government as a percentage of GDP or adjusted for inflation is equivalent to a same-year surplus don't understand the definitions and purposes of each of these terms.
Congressional Budget Office (CBO) vs. These "Partisan" Numbers
Another common response to the above explanation of the myth of the Clinton surplus is that the budget surpluses are based on the numbers produced by the non-partisan Congressional Budget Office (CBO). Indeed if you access the CBO's "historic budget data" document , on the fist page you will see that 1998 shows a surplus of $69 billion, 1999 shows $126 billion, 2000 shows $236 billion--the same surpluses claimed by Clinton and CNN in the article mentioned at the top of this page.
However, further analysis of the document should make it very clear that important information is missing from the CBO document--specifically focusing on the last two columns of the table on page 1. If you take the $3,772.3 billion debt held by the public at the end of 1997 and subtract the "total" $69.3 billion surplus stated for 1998, you would expect to see the debt go down by 69.3 billion to $3,703 billion. Instead, the debt indicated for 1998 is $3,721.1 billion--suggesting a surplus of only $51.2 billion. This alone should tell you that the CBO numbers aren't telling the whole story because they don't add up--and the story they aren't telling is intragovernmental holdings.
The reality is that the federal government and politicians use a form of accounting that would get most accountants thrown in jail. As USA Today wrote in 2007 , special rules used by the federal government allowed it to report a $248 billion deficit in 2006 rather than $1.3 trillion if it had used corporate-style accounting.
While the CBO may be non-partisan, that does not mean the CBO is non-political nor that their numbers are honest or transparent.
Update 4/26/2009: Please read this note where President Obama, too, is trying to get certain government expenditures not "counted" in the official CBO deficit even though they'll cost billions of dollars and increase the national debt. As this paragraph has explained, CBO numbers are not to be trusted as an accurate reflection of reality.
The fact remains that the total national debt, as explained above, is the only real measure of what we owe. We can discuss the meaning of the different columns of the CBO documents and what they do and don't include, and we can argue about the accounting tricks that the federal government uses for political reasons. But the fact remains that the Bureau of the Public Debt is responsible for the daily reporting of the total national debt. Regardless of how politicians play with the budget numbers, the current national debt reported by the Bureau of the Public Debt is what we owe. If, at the end of each year, we owe more than we did the previous year, politicians can call it a surplus until the cows come home--but the fact remains that we owed more money than we did the previous year. Playing accounting and political games to call it a "surplus" doesn't change the fact that we're even more in debt than we were the year before.
During the Clinton years, the total national debt increased every year. Only in Washington D.C. would that somehow be considered a "surplus."
There was a Surplus Not Counting Interest and "Off-Budget" Items
It is sometimes claimed that there was a surplus but the national debt didn't go down because of interest payments on the existing debt, or because of "off-budget" items. Anyone that makes this claim is just buying into twisted Washington accounting games that are convenient for their argument.
The reality is that "off-budget" items and interest payments on the debt are real government expenditures just like any other. Off-budget items are declared as such by the stroke of a pen specifically for political reasons but it does not change the fact that they are part of government expenses.
To demonstrate the fallacy of this argument, consider this: We have a budget surplus right now, too, if we declare the department of Health and Human Services to be "off-budget." After all, Congress and the president can do that with the stroke of a pen. Presto, we now have a surplus!
Of course, we wouldn't really have a surplus. And neither did Clinton. It's just a matter of saying that some expenses don't "count" even though they do.
There Was a Surplus But It Wasn't Used to Pay Down The Debt
Some people claim that there was a surplus but it wasn't used to pay down the debt. They claim that one issue is whether or not you have a surplus and another issue is what you do with it; hence they also claim that you can have a surplus and not have the national debt go down.
However, this is not true.
If there was a surplus and it wasn't used to pay down the debt, then that means it was spent--which means even if there could have been a surplus, it evaporated the moment it was spent. During the Clinton years, not only was it spent--the government borrowed even more! Every year!
It's like earning $30k in a year and only having $29k in expenses--so you have a $1000 surplus. To celebrate, you then go out and spend $2000 on a new LCD TV. All the sudden you earned $30k and spent $31k and what originally looked like a $1000 surplus is now a $1000 deficit and you're even further in debt. You almost had your financial house in order but then you went out and spent the "extra" money rather than saving it or paying off some of your existing debt.
In short, if the government had a surplus and spent it on anything other than paying down the national debt, there was no longer a surplus the moment the money was spent on something else.
Comparing National Debt on January 1st
Some have responded by saying that Clinton had a surplus and paid down the debt because, when they compare the national debt from one January 1st to the next, the debt does show a decrease. This may be an honest mistake, but the government's fiscal year is from October 1st through September 30th. All government and budgetary activities are based on that fiscal year so it is necessary to do debt comparisons using that same fiscal year. As a result, all comparisons should be made either on September 30th or October 1st... not January 1st.
FactCheck.org Says Clinton Had a Surplus
FactCheck.org repeats and uses the same government numbers that this article illustrates to be misleading. Further information on why the CBO's numbers (and FactCheck's numbers) are misleading is explained in my follow-up article here
The Link Provided Above is Allegedly False
Some people have claimed that the link I provided (
http://www.treasurydirect.gov/NP/BPDLogin?application=np) is an illegitimate or fraudulent site that provides false numbers. I don't know where that accusation comes from or why people think that, but I've seen at least some comments that criticize the link because it doesn't point to
http://www.ustreas.gov/. To verify that my link is to a valid government information source, please follow these steps:
Go to the U.S. Treasury website:
http://www.ustreas.gov/
Click on "Bureaus": Takes you to
http://www.ustreas.gov/bureaus/
Click on "Bureau of the Public Debt": Takes you to
http://www.publicdebt.treas.gov/
Scroll down to the section "The U.S. Public Debt" and click on "See the U.S. Public Debt to the Penny."
This takes you to the link I originally provided:
http://www.treasurydirect.gov/NP/BPDLogin?application=np
The assertion that my article points people to a fraudulent website is incorrect. I am providing a direct link to the U.S. Treasury, Bureau of the Public Debt, National Debt to the Penny website. This is the official website that the U.S. government provides which allows the public to track the debt.
