The Deficit: Comparing 2010 to 2000 when we had a surplus

[Quantum Windbag]

The Deficit: Comparing 2010 to 2000 when we had a surplus

If we had a surplus in 2000, why did the national debt go up that year?

Because politicians have a different definition of surplus than people who work for a living.

 

[Quantum Windbag]

The Deficit: Comparing 2010 to 2000 when we had a surplus

If we had a surplus in 2000, why did the national debt go up that year?

A surplus is the difference between revenues and expenditures. We had a surplus in 1998, 1999 and 2000.

The gross national debt rose because of increases in liabilities in the SS and Medicare and Medicaid trusts. However, that is intra-government debt. If you net out the credits to the Treasury with debits to the trusts, United States federal government debt fell.

We did not have a surplus. What we had was accounting tricks that counted the SS revenue as part of the general revenue during those years.

 

[Quantum Windbag]

When i used to have budgetary responsibilities, I knew that i could make any defined period look good or at least better if the period from which I robbed did not matter. For that reason, I am very suspiscious of accounting tricks and adjustments.

For the purposes of reality, if the debt went up, there was no surplus. If the debt went down there was a surplus. The debt has not decreased in recent memory.

07/22/2009

09/30/2008
11,634,723,000,000.00

10,024,724,896,912.49

09/30/2007 9,007,653,372,262.48
09/30/2006 8,506,973,899,215.23
09/30/2005 7,932,709,661,723.50
09/30/2004 7,379,052,696,330.32
09/30/2003 6,783,231,062,743.62
09/30/2002 6,228,235,965,597.16
09/30/2001 5,807,463,412,200.06
09/30/2000 5,674,178,209,886.86


09/30/1999 5,656,270,901,615.43
09/30/1998 5,526,193,008,897.62
09/30/1997 5,413,146,011,397.34
09/30/1996 5,224,810,939,135.73
09/29/1995 4,973,982,900,709.39
09/30/1994 4,692,749,910,013.32
09/30/1993 4,411,488,883,139.38
09/30/1992 4,064,620,655,521.66
09/30/1991 3,665,303,351,697.03
09/28/1990 3,233,313,451,777.25

This is poor financial analysis. You are only looking at one side of the balance sheet and extrapolating cash flows from changes on that line of the balance sheet. That is wrong. It's not an accounting trick nor an adjustment. It's simple Finance 101.

Your argument is that increases in long-term debt equates to negative cash flow, i.e. a deficit. Let's apply your logic to a corporation.

Here is Microsoft's long-term debt.

Q3 2011, $11.9 billion
2010, $4.9 billion
2009, $3.7 billion
2008, $0

MSFT Balance Sheet | Microsoft Corporation Stock - Yahoo! Finance

Look at that. Every year, Microsoft's gross long-term debt rose. By your logic, Microsoft had negative cash flow of $3.7 billion in 2009, $1.2 billion in 2010, and $7 billion in the first three quarters of this year. Right?

Wrong.

Cash flow generated by operations less cash generated by investing activities is all internally generated capital generated by a company, including investment activities. Let's look at all of Microsoft's internally generated cash.

Q3 2011, +$1.5 billion
2010, +$10.7 billion
2009, +$3.3 billion
2008, +17.2 billion

MSFT Cash Flow | Microsoft Corporation Stock - Yahoo! Finance

As you can see, Microsoft generated cash flow, even though it's gross long-term debt rose, i.e it ran a surplus even while its debt went up.

A surplus is when revenues exceed expenses. A deficit is when expenses exceed revenues. Nothing more. The only people who make the argument that there were no surpluses at the end of the Clinton era are conservatives and/or Republicans with little to no understanding of how government accounting works. You don't hear it from conservative economists or financial experts. Why? Because they know its wrong.

Maybe you should take that up with Clinton.

President Clinton announces another record budget surplus - CNN

FYI, if Microsoft ran their books the way the government does (using cash accounting principles) you might have a valid comparison here. Since they don't, you are a bit off in asserting that my insistence that the deficit going up is proof that we did not have a surplus.

 

[Toro]

If we had a surplus in 2000, why did the national debt go up that year?

A surplus is the difference between revenues and expenditures. We had a surplus in 1998, 1999 and 2000.

The gross national debt rose because of increases in liabilities in the SS and Medicare and Medicaid trusts. However, that is intra-government debt. If you net out the credits to the Treasury with debits to the trusts, United States federal government debt fell.

We did not have a surplus. What we had was accounting tricks that counted the SS revenue as part of the general revenue during those years.

Nope. We had included SS disbursements and receipts in the budget for many years prior.

A surplus is when revenues exceed expenses. We had more money coming into the Treasury than was being paid out, and that money was used to pay off publicly traded bonds. The total amount if publicly traded debt fell. This is a fact.

Again, there must be hundreds of conservative economists out there willing to prove that there was no surplus. Please link some.

 

[Toro]

When i used to have budgetary responsibilities, I knew that i could make any defined period look good or at least better if the period from which I robbed did not matter. For that reason, I am very suspiscious of accounting tricks and adjustments.

For the purposes of reality, if the debt went up, there was no surplus. If the debt went down there was a surplus. The debt has not decreased in recent memory.

07/22/2009

09/30/2008
11,634,723,000,000.00

10,024,724,896,912.49

09/30/2007 9,007,653,372,262.48
09/30/2006 8,506,973,899,215.23
09/30/2005 7,932,709,661,723.50
09/30/2004 7,379,052,696,330.32
09/30/2003 6,783,231,062,743.62
09/30/2002 6,228,235,965,597.16
09/30/2001 5,807,463,412,200.06
09/30/2000 5,674,178,209,886.86


09/30/1999 5,656,270,901,615.43
09/30/1998 5,526,193,008,897.62
09/30/1997 5,413,146,011,397.34
09/30/1996 5,224,810,939,135.73
09/29/1995 4,973,982,900,709.39
09/30/1994 4,692,749,910,013.32
09/30/1993 4,411,488,883,139.38
09/30/1992 4,064,620,655,521.66
09/30/1991 3,665,303,351,697.03
09/28/1990 3,233,313,451,777.25

This is poor financial analysis. You are only looking at one side of the balance sheet and extrapolating cash flows from changes on that line of the balance sheet. That is wrong. It's not an accounting trick nor an adjustment. It's simple Finance 101.

Your argument is that increases in long-term debt equates to negative cash flow, i.e. a deficit. Let's apply your logic to a corporation.

Here is Microsoft's long-term debt.

Q3 2011, $11.9 billion
2010, $4.9 billion
2009, $3.7 billion
2008, $0

MSFT Balance Sheet | Microsoft Corporation Stock - Yahoo! Finance

Look at that. Every year, Microsoft's gross long-term debt rose. By your logic, Microsoft had negative cash flow of $3.7 billion in 2009, $1.2 billion in 2010, and $7 billion in the first three quarters of this year. Right?

Wrong.

Cash flow generated by operations less cash generated by investing activities is all internally generated capital generated by a company, including investment activities. Let's look at all of Microsoft's internally generated cash.

Q3 2011, +$1.5 billion
2010, +$10.7 billion
2009, +$3.3 billion
2008, +17.2 billion

MSFT Cash Flow | Microsoft Corporation Stock - Yahoo! Finance

As you can see, Microsoft generated cash flow, even though it's gross long-term debt rose, i.e it ran a surplus even while its debt went up.

A surplus is when revenues exceed expenses. A deficit is when expenses exceed revenues. Nothing more. The only people who make the argument that there were no surpluses at the end of the Clinton era are conservatives and/or Republicans with little to no understanding of how government accounting works. You don't hear it from conservative economists or financial experts. Why? Because they know its wrong.

Maybe you should take that up with Clinton.

President Clinton announces another record budget surplus - CNN

FYI, if Microsoft ran their books the way the government does (using cash accounting principles) you might have a valid comparison here. Since they don't, you are a bit off in asserting that my insistence that the deficit going up is proof that we did not have a surplus.

People who don't understand how government accounting works look at total debt and assume that rising gross debt means there are deficits. You would fail an introductory finance course for making this assertion.

The cash flow statement for a corporation is similar to the way the government accounts for it's books. Government uses cash flow accounting while the cash flow statement reconciles cash inflows and outflows with accrual accounting. So they are similar. Likewise, comparing gross debt for the government is similar to comparing gross debt for a company. It doesn't matter much if you use cash or accrual accounting. So the analogy works.

 

[8537]

foolish people think we had a surplus. We didn't, Clinton had money diverted from SS to the general fund

This is simply not true. in 1999 and 2000, the unified budget - including SS - ran a surplus. That's why debt held by the public declined.

 

[Toro]

foolish people think we had a surplus. We didn't, Clinton had money diverted from SS to the general fund

This is simply not true. in 1999 and 2000, the unified budget - including SS - ran a surplus. That's why debt held by the public declined.

If it were true that we "diverted funds from SS," outstanding publicly traded bonds would have increased. But they fell.

 

[PLYMCO_PILGRIM]

So if you care about the deficit it might be useful to look at the last time we have a balanced budget (2000) and compare it with today's budget (2010). Not suprisingly both sides are playing fast and loose with the truth...

Of course you have to adjust for the growth of the economy. The common approach is to normalize the data in terms of making it all a percentage of GDP. I have looked at budget categories as a percent of GDP and compared 2000 and 2010. Remember 2000 was also a Democratic President and Republican Congress. They compromised to balance the budget.

The biggest gaps then and now in descending order are:

Revenue's: Currently are down 5.7% as a percent of GDP compared to 2000
Top marginal tax rates are at an all time low, Capital gains rates are 5% below an all time low. Hard to make a case the wealthy are overtaxed and by historical standards they are undertaxed. The Bush tax cuts should be repealed

Defense: Currently up 1.75% as a percent of GDP compared to 2000
You can't run 3 wars and maintain troops in places of all wars past. We have a constitutional mandate to defend the country but we don't have one to defend the rest of the world. Need a real discussion here what is affordable and practicable. Let other coutries pay for their own defense.

Medicare: Currently up 1.1% as a percentage of GDP compared to 2000
Well we can thank Bush for perscription drug benefits but the Ryan plan at least trys to make a real effort to control costs. Democrats are wrong for demonizing the plan and mobilizing seniors against it. With some type of benefit floor Ryan's plan is credible and should be adopted.

Unemployment compensation: Currently up .97% of GDP compared to 2000
We need a revenue nuetral restructuring of our tax code to generate jobs. My choice, eliminate corporate income taxes, raise the capital gains tax to the level of income tax, tax net capital sent overseas. This will generate tax revenue from overseas investment and provide capital for local businesses to grow.

Health: Currently up .82% of GDP compared to 2000
You can't expand access without significant cost cuts in the system. Republicans need to stop talking about repeal and modify the system to impose significant cost reductions that were left out of the original bill. Stop playing political games and help the country.

Social Security: Currently up .70% of GDP compared to 2000
No idea what to do here. Should have been taken care of long ago. Most want back the money they put in but the money was long since given to their grandparents. Have no sense of a solution.

Enough for now. I would post links to support my points but I am not yet allowed.

Another doggie on the board! Welcome!

Sadly, there was no surplus....as other boardies have pointed out.

Here:

1. Would you like to see the actual national debt figures?
1993 4,351,044
1994 4,643,307
1995 4,920,586
1996 5,181,465
1997 5,369,206
1998 5,478,189
1999 5,605,523
2000 5,628,700

Historical Tables | The White House (table 7.1)

The table 7.1 will also show that he inherited a $4 trillion debt.

That means the debt increased 41% under Clinton.And no wars or military build up to blame it on!

Facts are stubborn things

Nice new avy

 

[Si modo]

Proposed SAT question:

Deficit is to surplus as debt is to ___________?

 

[PLYMCO_PILGRIM]

Proposed SAT question:

Deficit is to surplus as debt is to _____?

more debt?


Credit.

 

[Si modo]

Proposed SAT question:

Deficit is to surplus as debt is to _____?

more debt?


Credit.

 

[NYcarbineer]

...

Revenue's: Currently are down 5.7% as a percent of GDP compared to 2000
Top marginal tax rates are at an all time low, Capital gains rates are 5% below an all time low. Hard to make a case the wealthy are overtaxed and by historical standards they are undertaxed. The Bush tax cuts should be repealed

...

Americans are already overtaxed. They have been for a long time. Go back to pre-WWII levels and you'll see that historically, we are overtaxed.

Keep the Bush tax cuts. Cut spending instead. Problem solved.

Seriously? What percent of GDP was defense pre-WWII?

You want to be the world's policeman and free of charge protector of foreign nations AND have a modern civilized domestic social policy,

you have to pay for it.

Your choices are:

1. become a third world country domestically, by eliminating modern social spending

2. stop being the world's policeman, etc.

3. collect enough revenue to pay for both.

You can't be a low tax nation on a high cost agenda, or, you go broke.

 

[NYcarbineer]

A growing economy, and not higher taxes is what raises revenues

Then why do we run deficits almost every time the economy is growing?

 

[Toro]

A growing economy, and not higher taxes is what raises revenues

Then why do we run deficits almost every time the economy is growing?

Reagan, Bush I and Clinton all raised taxes, and revenues went up.

What should be plainly obvious is that taxes have risen over the past century, and revenues have risen fairly consistently over time.

That doesn't mean we should always raise taxes, but this notion that you can't raise revenues when tax rates increase is nonsense.

 

[NYcarbineer]

So if you care about the deficit it might be useful to look at the last time we have a balanced budget (2000) and compare it with today's budget (2010). Not suprisingly both sides are playing fast and loose with the truth...

Of course you have to adjust for the growth of the economy. The common approach is to normalize the data in terms of making it all a percentage of GDP. I have looked at budget categories as a percent of GDP and compared 2000 and 2010. Remember 2000 was also a Democratic President and Republican Congress. They compromised to balance the budget.

The biggest gaps then and now in descending order are:

Revenue's: Currently are down 5.7% as a percent of GDP compared to 2000
Top marginal tax rates are at an all time low, Capital gains rates are 5% below an all time low. Hard to make a case the wealthy are overtaxed and by historical standards they are undertaxed. The Bush tax cuts should be repealed

.

Actually revenues as a percent of GDP are down about 30%.

 

[editec]

So if you care about the deficit it might be useful to look at the last time we have a balanced budget (2000) and compare it with today's budget (2010). Not suprisingly both sides are playing fast and loose with the truth...

Of course you have to adjust for the growth of the economy. The common approach is to normalize the data in terms of making it all a percentage of GDP. I have looked at budget categories as a percent of GDP and compared 2000 and 2010. Remember 2000 was also a Democratic President and Republican Congress. They compromised to balance the budget.

The biggest gaps then and now in descending order are:

Revenue's: Currently are down 5.7% as a percent of GDP compared to 2000
Top marginal tax rates are at an all time low, Capital gains rates are 5% below an all time low. Hard to make a case the wealthy are overtaxed and by historical standards they are undertaxed. The Bush tax cuts should be repealed

I agree but is NOW the time to do that? I truly don't know but I have my doubts.

Defense: Currently up 1.75% as a percent of GDP compared to 2000
You can't run 3 wars and maintain troops in places of all wars past. We have a constitutional mandate to defend the country but we don't have one to defend the rest of the world. Need a real discussion here what is affordable and practicable. Let other coutries pay for their own defense.

Empire costs money. I wouldn't mind if the benefits of empire were accrusing to all of us but they are clearly not .

Medicare: Currently up 1.1% as a percentage of GDP compared to 2000
Well we can thank Bush for perscription drug benefits but the Ryan plan at least trys to make a real effort to control costs. Democrats are wrong for demonizing the plan and mobilizing seniors against it. With some type of benefit floor Ryan's plan is credible and should be adopted.

There is NO solution to this mess.

Believe me when I tell you that, short of redesigning society away from this capitalism system we have today, this problem is ONLY going to get worse.

And I do NOT have a society redesign that I think will solve the problem, either. All I know is this: market forces are driving up the cost of HC, and nothing anybody does is going to change that dynamic.

Unemployment compensation: Currently up .97% of GDP compared to 2000
We need a revenue nuetral restructuring of our tax code to generate jobs. My choice, eliminate corporate income taxes, raise the capital gains tax to the level of income tax, tax net capital sent overseas. This will generate tax revenue from overseas investment and provide capital for local businesses to grow.

Fix our trade policies. They're freaking stupid from a nationalistic POV.

Health: Currently up .82% of GDP compared to 2000
You can't expand access without significant cost cuts in the system. Republicans need to stop talking about repeal and modify the system to impose significant cost reductions that were left out of the original bill. Stop playing political games and help the country.

We can mitigate the waste but we cannot solve the basic problems drivng up the cost of health care.

Social Security: Currently up .70% of GDP compared to 2000
No idea what to do here. Should have been taken care of long ago. Most want back the money they put in but the money was long since given to their grandparents. Have no sense of a solution.

The problem isn't that social serutity is broke.

The problem is that the debtor that SSI lent its money to (the FED) , might be.



Enough for now. I would post links to support my points but I am not yet allowed.[/QUOTE]

Well I approve of your posting style anyway.

At least you're attempting to discuss ISSUES and haven't gone the cult of personality politics that is so detrimental to having discussions about these issues.

 

[Contumacious]

The Deficit: Comparing 2010 to 2000 when we had a surplus .

HUH?

WTF?

Only one President in the history of our nation paid off the public debt. That was President Andrew Jackson.

.

 

[PoliticalChic]

1. Would you like to see the actual national debt figures?
1993 4,351,044
1994 4,643,307
1995 4,920,586
1996 5,181,465
1997 5,369,206
1998 5,478,189
1999 5,605,523
2000 5,628,700


The table 7.1 will also show that he inherited a $4 trillion debt.

Seems like you are leaving out an important column which is the held by Federal Government accounts column. The same document shows that yeah as being a surplus which I am sure you knew.

The point is not to argue about government accounting. The point is 2000 paints a fairly realistic map of what must be done to get back on track. At least for those few of us who are not ideological extemists.[/QUOTE]

This is the pertinent information, dispositive as to whether or not there was a surplus...there was not.

1. There are, actually, two kinds of government debt, public debt, which we owe to bondholders and other investors, and intragovernmental debt, which is debt the government owes to itself. National debt is actually the total of the two. President Clinton was speaking of the public debt alone, ignoring the intragovernmental portion. This is because the intragovernmental debt goes up every year, and because there are some gullible folks who would believe it. Shoe fit?

2. The White House OMB reports a total deficit of $320.4 billion over the eight year period, ’93-2000. Historical Tables | The White House (table 1.1) And they also report a national debt increase of $1.6 trillion over the eight years. So, how to explain Clinton’s ‘historic surplus’?

3. The 1983 Greenspan Commission initiated changes in Social Security that generated large surpluses. “As soon as the first surpluses began to role in, in 1985, the money was put into the general revenue fund and spent on other government programs.” How Ronald Reagan and Alan Greenspan Pulled off the Greatest Fraud Ever Perpetrated against the American People | Dissident Voice

a. In 1985, the Social Security Trust Fund surplus was only $7.5 billion, a decade later it was $60.4 billion.

b. In 2000, the surplus was $152 billion. Clinton took the $152 billion, and counted it as income, instead of the debt it actually repesented.

c. “Instead of Social Security subsidizing the rest of the budget, the rest of the budget will have to subsidize Social Security.” Andrew Biggs, a resident scholar at the American Enterprise Institute http://www.cbsnews.com/stories/2009/03/31/politics/washingtonpost/main4906936.shtml


I hope that in the future you will avoid the prevarication [if I were a liberal, I would of course, say 'lie'] of the Clinton administration, and admit that there was no surplus.

 

[Trajan]

What is relevant is the net debt plus the unfunded liabilities.

so, if I recall we never hashed this out, are we in trouble, or not? when do the unfunded liabilities take us down?

 

[Toro]

1. There are, actually, two kinds of government debt, public debt, which we owe to bondholders and other investors, and intragovernmental debt, which is debt the government owes to itself. National debt is actually the total of the two. President Clinton was speaking of the public debt alone, ignoring the intragovernmental portion. This is because the intragovernmental debt goes up every year, and because there are some gullible folks who would believe it. Shoe fit?

2. The White House OMB reports a total deficit of $320.4 billion over the eight year period, ’93-2000. Historical Tables | The White House (table 1.1) And they also report a national debt increase of $1.6 trillion over the eight years. So, how to explain Clinton’s ‘historic surplus’?

3. The 1983 Greenspan Commission initiated changes in Social Security that generated large surpluses. “As soon as the first surpluses began to role in, in 1985, the money was put into the general revenue fund and spent on other government programs.” How Ronald Reagan and Alan Greenspan Pulled off the Greatest Fraud Ever Perpetrated against the American People | Dissident Voice

a. In 1985, the Social Security Trust Fund surplus was only $7.5 billion, a decade later it was $60.4 billion.

b. In 2000, the surplus was $152 billion. Clinton took the $152 billion, and counted it as income, instead of the debt it actually repesented.

c. “Instead of Social Security subsidizing the rest of the budget, the rest of the budget will have to subsidize Social Security.” Andrew Biggs, a resident scholar at the American Enterprise Institute http://www.cbsnews.com/stories/2009/03/31/politics/washingtonpost/main4906936.shtml


I hope that in the future you will avoid the prevarication [if I were a liberal, I would of course, say 'lie'] of the Clinton administration, and admit that there was no surplus.

Finance 101 - A deficit is when expenses exceed revenues. A surplus is when revenues exceed expenses. Nothing more. A rising gross debt does not imply a deficit. Money comes into the Treasury. Money goes out of the Treasury. It is a very simple concept.

More money came into the Treasury during the last years of the 1990s than was paid out. That money was used to pay down publicly-traded government bonds.

Gross intra-government debt is irrelevant in the discussion of surpluses and deficits. If one is "avoiding prevarication," one would also note the rise in the intra-government assets at the time, which offset the rise in intra-government debt since a liability of the Treasury is an asset of the trusts. A correct financial analysis of the government's financial position looks at both sides of the balance sheet, not just one.