The Myth of the Clinton Surplus

[Wehrwolfen]

The Myth of the Clinton Surplus​

By: Craig Steiner
October 31, 2007


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.

Verifying this is as simple as accessing the U.S. Treasury (see note about this link below) website where the national debt is updated daily and a history of the debt since January 1993 can be obtained. Considering the government's fiscal year ends on the last day of September each year, and considering Clinton's budget proposal in 1993 took effect in October 1993 and concluded September 1994 (FY1994), here's the national debt at the end of each year of Clinton Budgets:


(Excerpt)

Read more:
The Myth of the Clinton Surplus

 

[konradv]

If it's a myth, it's because Bush destroyed it.

 

[Toro]

Been there, done that.

http://www.usmessageboard.com/econo...ng-the-clinton-administration-was-a-myth.html
http://www.usmessageboard.com/polit...ng-about-the-1990s-budget-surplus-thread.html

BTW, the guy quoted in the OP is a software engineer, not an economist or an accountant or someone who understands the issue.

 

[BreezeWood]

While not defending the increase of the federal debt under President Bush ...

that's a myth -

 

[konradv]

While not defending the increase of the federal debt under President Bush ...

that's a myth -

Our myth beats your myth. Just compare Clinton's popularity to Bush's.

 

[BreezeWood]

While not defending the increase of the federal debt under President Bush ...

that's a myth -

Our myth beats your myth. Just compare Clinton's popularity to Bush's.

its a myth he is not supporting the Republicans.


the Democrats raised taxes and balanced the budget - the Republicans lowered taxes and started an unfunded Iraqi war.

 

[J.E.D]

Myth? Somebody should tell Bush, because that's the reason he gave for handing out checks to every taxpayer.

 

[Wehrwolfen]

Verifying this is as simple as accessing the U.S. Treasury (see note about this link below) website where the national debt is updated daily and a history of the debt since January 1993 can be obtained. Considering the government's fiscal year ends on the last day of September each year, and considering Clinton's budget proposal in 1993 took effect in October 1993 and concluded September 1994 (FY1994), here's the national debt at the end of each year of Clinton Budgets:


Fiscal

Year Year Ending National Debt Deficit
FY1993 09/30/1993 $4.411488 trillion
FY1994 09/30/1994 $4.692749 trillion $281.26 billion
FY1995 09/29/1995 $4.973982 trillion $281.23 billion
FY1996 09/30/1996 $5.224810 trillion $250.83 billion
FY1997 09/30/1997 $5.413146 trillion $188.34 billion
FY1998 09/30/1998 $5.526193 trillion $113.05 billion
FY1999 09/30/1999 $5.656270 trillion $130.08 billion
FY2000 09/29/2000 $5.674178 trillion $17.91 billion
FY2001 09/28/2001 $5.807463 trillion $133.29 billion​

As can clearly be seen, in no year did the national debt go down, nor did Clinton leave President Bush with a surplus that Bush subsequently turned into a deficit. Yes, the deficit was almost eliminated in FY2000 (ending in September 2000 with a deficit of "only" $17.9 billion), but it never reached zero--let alone a positive surplus number. And Clinton's last budget proposal for FY2001, which ended in September 2001, generated a $133.29 billion deficit. The growing deficits started in the year of the last Clinton budget, not in the first year of the Bush administration.

 

[konradv]

Verifying this is as simple as accessing the U.S. Treasury (see note about this link below) website where the national debt is updated daily and a history of the debt since January 1993 can be obtained. Considering the government's fiscal year ends on the last day of September each year, and considering Clinton's budget proposal in 1993 took effect in October 1993 and concluded September 1994 (FY1994), here's the national debt at the end of each year of Clinton Budgets:


Fiscal

Year Year Ending National Debt Deficit
FY1993 09/30/1993 $4.411488 trillion
FY1994 09/30/1994 $4.692749 trillion $281.26 billion
FY1995 09/29/1995 $4.973982 trillion $281.23 billion
FY1996 09/30/1996 $5.224810 trillion $250.83 billion
FY1997 09/30/1997 $5.413146 trillion $188.34 billion
FY1998 09/30/1998 $5.526193 trillion $113.05 billion
FY1999 09/30/1999 $5.656270 trillion $130.08 billion
FY2000 09/29/2000 $5.674178 trillion $17.91 billion
FY2001 09/28/2001 $5.807463 trillion $133.29 billion​

As can clearly be seen, in no year did the national debt go down, nor did Clinton leave President Bush with a surplus that Bush subsequently turned into a deficit. Yes, the deficit was almost eliminated in FY2000 (ending in September 2000 with a deficit of "only" $17.9 billion), but it never reached zero--let alone a positive surplus number. And Clinton's last budget proposal for FY2001, which ended in September 2001, generated a $133.29 billion deficit. The growing deficits started in the year of the last Clinton budget, not in the first year of the Bush administration.

Then why was the debt clock turned off and why do CONS keep referencing it now, if it's wrong?

Turn back the debt clock - Sep. 7, 2000

 

[Toro]

The national debt rising or falling neither confirms nor contradicts the existence of a surplus. Republicans and conservatives who understand the fiscal accounts don't make the argument that there wasn't a surplus. See my above thread for an explanation.

 

[Norman]

Been there, done that.

http://www.usmessageboard.com/econo...ng-the-clinton-administration-was-a-myth.html
http://www.usmessageboard.com/polit...ng-about-the-1990s-budget-surplus-thread.html

BTW, the guy quoted in the OP is a software engineer, not an economist or an accountant or someone who understands the issue.

Toro I actually read what you stated there.

First I have one question. You stated that the real debt should be counted as unfunded liabilities+debt. Did the debt grow under Clinton if you use this definition as unfunded liabilities grew? I do believe you should take the logic all the way to the rightful conclusion. If you say that the debt didn't increase because of accounting gimmicks you should remove all of them and thus include the unfunded liabilities (not saying you didn't). Also I think that a surplus or deficit should be measured GDP wise, because that just makes more sense especially in this type of monetary system. Trade deficits aka. true debt should not be forgotten either.


Second thing is that I find your logic a bit flawed in some cases. For example you made a kind of funky comparison in there. You compared social security trust fund investing into government bonds and a private enterprise doing the same.

This is an invalid comparison. You should instead be comparing SS investing into government bonds and a private insurance enterprise investing into it's own debt. This is the proper way to compare it and is why the whole thing is called ponzi scheme. It's entirely different to "invest" into your own debt than to invest into someone else's debt. One man's asset is one man's liability, and in hands of private enterprise government debt is an asset. It IS fundamentally different for a private corporation to own government debt than for the government to own it by itself.

Government "investing" into it's own debt is a pay as you go plan. Not a funded retirement plan. Most governments nowadays are pretty cautious of this model. European countries mostly use mixed model where for example 50% of the premiums are put aside and invested and 50% paid to the current retirees. In countries like Sweden you can actually invest some of that money yourself.

 

[Sallow]

Debunked!

 

[Political Junky]

President Clinton is welcomed worldwide. Bush, Jr. mostly hangs out at home, out of public sight.

 

[Chris]

The surplus was real.

The Republican reality is a myth.

 

[Toro]

Been there, done that.

http://www.usmessageboard.com/econo...ng-the-clinton-administration-was-a-myth.html
http://www.usmessageboard.com/polit...ng-about-the-1990s-budget-surplus-thread.html

BTW, the guy quoted in the OP is a software engineer, not an economist or an accountant or someone who understands the issue.

Toro I actually read what you stated there.

First I have one question. You stated that the real debt should be counted as unfunded liabilities+debt. Did the debt grow under Clinton if you use this definition as unfunded liabilities grew? I do believe you should take the logic all the way to the rightful conclusion. If you say that the debt didn't increase because of accounting gimmicks you should remove all of them and thus include the unfunded liabilities (not saying you didn't). Also I think that a surplus or deficit should be measured GDP wise, because that just makes more sense especially in this type of monetary system. Trade deficits aka. true debt should not be forgotten either.


Second thing is that I find your logic a bit flawed in some cases. For example you made a kind of funky comparison in there. You compared social security trust fund investing into government bonds and a private enterprise doing the same.

This is an invalid comparison. You should instead be comparing SS investing into government bonds and a private insurance enterprise investing into it's own debt. This is the proper way to compare it and is why the whole thing is called ponzi scheme. It's entirely different to "invest" into your own debt than to invest into someone else's debt. One man's asset is one man's liability, and in hands of private enterprise government debt is an asset. It IS fundamentally different for a private corporation to own government debt than for the government to own it by itself.

Government "investing" into it's own debt is a pay as you go plan. Not a funded retirement plan. Most governments nowadays are pretty cautious of this model. European countries mostly use mixed model where for example 50% of the premiums are put aside and invested and 50% paid to the current retirees. In countries like Sweden you can actually invest some of that money yourself.

A valid argument is that the government did not run an operating surplus, i.e. if you exclude payroll taxes and disbursements out of the trust funds. However, we refer to the "surplus" as all money coming into the government and all money going out. Thus we ran a surplus. That is why public debt declined.

I would be the first to admit that SS is a flawed, and frankly bad model. No other pension fund I know of invests 100% in government bonds. If we ran it like a real pension fund, and if people wanted to invest their own savings, we would be much better off. But yes, as it is currently configured, SS is exactly like a pension fund that invests 100% in government bonds except that it cuts out the middleman and invests the money for you. You are correct in that it is like a company issuing debt to its pension plan but that doesn't mean the economics are any different. It's a bad plan, but a company that issues $100 million of bonds to the market or issues a $100 million credit to the pension fund, the economics are exactly the same to the balance sheet of the company. Economically, the company nor the government are "owing it themselves." They are owing it to the plan participants.

 

[Mr Natural]

Ah, this again.

If it's a myth, then where did those $300 checks that Bush sent us come from?

 

[NYcarbineer]

Clinton had several years of a budget surplus. When the spending in your annual budget is a smaller number than the amount of revenue you take in that year then you have a budget surplus.

It's really not that complicated.

 

[Political Junky]

Cons will believe anything their leaders tell them. They even believed that Willard was going to win in a landslide.

 

[Lakhota]

Another debunked NaziCon thread.

 

[Lumpy 1]

While not defending the increase of the federal debt under President Bush ...

that's a myth -

Our myth beats your myth. Just compare Clinton's popularity to Bush's.

Incorrigible liars, sexual harassers, draft dodgers, probable rapists, adulterers and cigar tricksters are very popular with Democrats..