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

[NYcarbineer]

If Bush had used the Medicare trust fund to balance the budget you would be screaming about it until hell froze over. Why does Clinton doing it get a pass?

Bush cited the surplus as justification for cutting taxes, first of all. Are all you people now of the opinion that Bush was lying????

I haven't said ANYTHING other than pointing out that Clinton did in fact have balanced budgets near the end of his presidency.

About a surplus existing at all?

Yes.

As for Clinton, he submitted a budget plan that, if carried through, would have resulted in a balanced budget in a few years. The budget never actually got balanced under Clinton because he relied on intragovernmental lending to make it look like revenues exceeded expenses.

Really? And the CBO, and the treasury, and all the other agencies that monitor the budget in one way or another went along with this mythical fudging of the numbers by Clinton?

too funny

 

[American Cowboy]

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

He also cut the hell out of our National Defense.

 

[NYcarbineer]

Surplus
The amount by which the revenue of a government from taxes, tariffs and other sources exceeds its expenditures. A surplus means that the budget is likely healthy, at least in the short-term, and in any case the government does not have to resort to borrowing.
Surplus financial definition of Surplus. Surplus finance term by the Free Online Dictionary.

So, by the definition you just posted, which is the definition of a surplus, the budget was in surplus the last years of the 1990s. This is where you should stop arguing.

The part you've bolded is a qualifier (and isn't in fact the definition of a "surplus"). The part of the debt that matters to the surplus is the tradable debt of the United States, since cash from the surplus is used to pay down debt. Tradable debt fell at the end of the 1990s.

Friend Toro, there are some things on which we should be able to agree:

1. The national debt grew under Bill Clinton. It increased some 41%.

2.The figures that I have provide more than once indicate same. 41%.

No shit. That's because there were deficits until 97 or 98.

Budgets are annual. jeezus where do these people come from?

 

[NYcarbineer]

If Bush had used the Medicare trust fund to balance the budget you would be screaming about it until hell froze over. Why does Clinton doing it get a pass?

How could Clinton 'use' the Medicare trust fund to balance the budget when he didn't control any of the agencies/organizations who add up the numbers and determine whether or not any year's budget was balanced????

Do I actually have to explain this to you?

Clinton and Newt got together and decided to lie to everyone about everything. They decided that Clinton would get to claim that the budget was running a surplus, and the Republicans would get to claim they kept their Contract with America to reduce the size of the government. this made everyone in DC happy because they got to lie to their base, and the base was happy because they liked the lies they were hearing.

Once you learn that there is no difference between the tow parties you will be on your way to being able to understand how the government really works, and maybe even throwing off the shackles. Why do you think both parties hope the Tea Party just disappears? Those idiots want the politicians to actually keep their promises and stop lying to everyone, and only care that government spending and the debt go down, even if it means putting a bunch if radicals that think a balanced budget amendment is a good idea into Congress.

Who made this tale up?

For how many years has the Social Security trust fund invested its revenues in treasuries?

 

[NYcarbineer]

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

He also cut the hell out of our National Defense.

Not enough.

 

[NYcarbineer]

This thread is a classic example of how the rightwing propaganda machine HAS to have a negative version of every ******* story that might otherwise reflect positively on a Democrat or a liberal,

in this case being Bill Clinton.

That is a fundamental propaganda tactic, btw. People like Limbaugh have been living off that rule for decades.

 

[Sactowndog]

I'm not saying the national debt didn't rise under Clinton. I'm saying that in the final years of the 90s, he ran a surplus. I'm also saying that the rise in the national debt is a function of government accounting that does not account for the assets of the government, and that implying an increase in the national debt means deficits is factually incorrect. You don't have financial people making this argument, even from the right.

Toro, why are you arguing with her? You are assuming she will respond to a logical and wll thought out argument. She won't. She is plenty smart enough to understand what you have said but she and Windbag get jollies pulling peoples chains by ignoring posts thet completely understand.

One point I would like you to comment on. Windbags assertion that revenue rose from the act of selling T-Bills and not from revenue collection. I haven't seen a clear explanation or rebuttal of that point which is interesting. Meaningless because on a percentage basis it would be miniscule but interesting.

 

[Quantum Windbag]

Bush cited the surplus as justification for cutting taxes, first of all. Are all you people now of the opinion that Bush was lying????

I haven't said ANYTHING other than pointing out that Clinton did in fact have balanced budgets near the end of his presidency.

About a surplus existing at all?

Yes.

As for Clinton, he submitted a budget plan that, if carried through, would have resulted in a balanced budget in a few years. The budget never actually got balanced under Clinton because he relied on intragovernmental lending to make it look like revenues exceeded expenses.

Really? And the CBO, and the treasury, and all the other agencies that monitor the budget in one way or another went along with this mythical fudging of the numbers by Clinton?

too funny

Clinton and the Republicans fudged the numbers. As I have stated before. the CBO is wonderful, but Congress actually signs their paychecks, so they do what Congress tells them. Given the accounting rules they are told to follow the CBO had a surplus for the last couple of years of Clinton's presidency. Given the fact that that surplus actually came from borrowing from itself, saying there was a surplus is a bit like Enron saying its pension fund was fully funded.

In other words, if anyone but the government did it they would be in jail.

 

[Quantum Windbag]

How could Clinton 'use' the Medicare trust fund to balance the budget when he didn't control any of the agencies/organizations who add up the numbers and determine whether or not any year's budget was balanced????

Do I actually have to explain this to you?

Clinton and Newt got together and decided to lie to everyone about everything. They decided that Clinton would get to claim that the budget was running a surplus, and the Republicans would get to claim they kept their Contract with America to reduce the size of the government. this made everyone in DC happy because they got to lie to their base, and the base was happy because they liked the lies they were hearing.

Once you learn that there is no difference between the tow parties you will be on your way to being able to understand how the government really works, and maybe even throwing off the shackles. Why do you think both parties hope the Tea Party just disappears? Those idiots want the politicians to actually keep their promises and stop lying to everyone, and only care that government spending and the debt go down, even if it means putting a bunch if radicals that think a balanced budget amendment is a good idea into Congress.

Who made this tale up?

For how many years has the Social Security trust fund invested its revenues in treasuries?

I honestly do not know. I will point out that the fact that they have been doing it for years does not make it right. If it actually worked that way we would still have slavery, and you would not even be able to talk about same sex marriage.

 

[Quantum Windbag]

Toro, why are you arguing with her? You are assuming she will respond to a logical and wll thought out argument. She won't. She is plenty smart enough to understand what you have said but she and Windbag get jollies pulling peoples chains by ignoring posts thet completely understand.

One point I would like you to comment on. Windbags assertion that revenue rose from the act of selling T-Bills and not from revenue collection. I haven't seen a clear explanation or rebuttal of that point which is interesting. Meaningless because on a percentage basis it would be miniscule but interesting.

You are assuming that your posts make sense.

 

[Sactowndog]

You are assuming that your posts make sense.

No I am assuming Toro's post makes sense. I would add my example of how I increased my debt today by borrowing against my home to pay a future liability (college) was a credible example of running a surplus and increasing debt. Something you and Chic refuse to acknowledge although I am certain you are both smart enough to understand.

I do find your point of falsifying revenues interesting and would like Toro's comment. Again even if it is true I suspect it is trivial. If you would like I can change the thread title to "understanding the arcane dynamics of government accounting".

 

[Google]

The question here is, once again, raising taxes, or supposedly repealing the Bush tax cuts, the correct thing to do to address both the national debt and supporting economic growth?

"The history of all hitherto existing society is the history of class struggles."
— Karl Marx, The Communist Manifesto

I have seen plenty of threads that are proclaiming that taxes must be raised using the dated tactics. If you want to see the reverence modern leftists hold Marx I suggest you take a sociology class at any university in America.

After this administration has spent $666 billion, threateningly telling America that it simply had to be done or else. Where is the evidence that it has achieved that mythical 'crisis' Obama exploited so well.

 

[Quantum Windbag]

No I am assuming Toro's post makes sense. I would add my example of how I increased my debt today by borrowing against my home to pay a future liability (college) was a credible example of running a surplus and increasing debt. Something you and Chic refuse to acknowledge although I am certain you are both smart enough to understand.

I do find your point of falsifying revenues interesting and would like Toro's comment. Again even if it is true I suspect it is trivial. If you would like I can change the thread title to "understanding the arcane dynamics of government accounting".

Except that you are not running a surplus because that loan does not count as revenue/income. I think Toro and I have reached the point where we disagree, and have moved on. He has no real problem with the government counting loans as revenue, and I agree with him that it is a legitimate practice for them. I just refuse to count that revenue toward the surplus/deficit because it is not revenue the government gets from outside itself.

Understand that I am just assuming that Toro has decided not to continue the debate with me because it is his way of not getting bogged down in minutiae. It could be he reached the conclusion that I am completely bonkers and decided to stop wasting his time.

 

[FA_Q2]

"...does not mean he is knowledgable about the topic."

To anyone who notes that the debt continues to climb, it is more than counterintuitve to claim that there could be a real surplus.

No matter his vocation, it is his argument that makes more sense than the counter. You, of course, may define a surplus into existence...but that hardly means that one exists.

Economics is not a science, although euphemistically called the 'dismal science,' as is indicated by your attempts to use same to show that the debt increases, but there is a surplus...

I understand how an individual who is not trained in financial analysis nor understands government accounting would think it is counterintuitive that a rise in total gross government debt would imply a deficit. But bear with me.

I asked you the question earlier about what happens to the gross nontradable liabilities of the Treasury when there is a surge in employment and payroll tax receipts? Do you think such liabilities would go up or down? Intuitively, one would think they would fall, right? After all, a rise in receipts should mean a fall in liabilities. In fact, it is just the opposite. Gross nontradable liabilities rise when there is a surge in payroll tax receipts.

Think of a mutual fund company that runs your 401k. Let's say you contribute $1000 a month to your 401k. At the end of the year, because you're such a good worker, you get a $10,000 bonus. Being the smart and responsible woman that you are, you put $5000 of your bonus into your 401k. The cash is sent to your mutual fund company and the mutual fund now owes you an extra $5000 on top of the $12,000 you socked away during the year. So for the year, the mutual fund owes you $17,000 (plus whatever your investments gained or lost, which for simplicity's sake, we'll assume is $0 for the year).

Now STOP!

At this point, is the mutual fund better or worse off? After all, it now owes you $17,000? After all, the gross debt of the mutual fund company has risen because it owes you another $17,000. So it must be worse off, right?

This is where you stop in your analysis of the government debt. It is incomplete.

Of course, the answer to the above question is "no." A mutual fund contracts with a management company, which invests your money. The mutual fund company has a liability with you but the $17,000 it has invested with the management company is an asset. Net net, they balance out. The mutual fund company owes you $17,000 but has a $17,000 asset with the management company. So its gross debt rises by $17,000 but its net worth does not change.

It is the same with the government. When SS receipts rise, the gross liabilities of the Treasury rises because it owes you the money (plus interest) it has received from you in payroll taxes. But that doesn't mean the Treasury is worse off because it has an asset in the social security trust. Net net, there is no change in the balance to the Treasury. The Treasury is credited with the amount taken through payroll taxes but those funds are debited to the social security trusts. They offset. That's what you are seeing when total debt rises. It doesn't take into account changes on the other side of the balance sheet, and has no bearing on cash inflows and outflows through the Treasury. Cash inflows exceeded cash expenses in the last part of the 90s. That is the definition of a surplus.

I get that this is a confusing and counterintuitive issue. And I expect someone who is dug too deep in the argument and confused like QW to pipe in that "Government accounting is not the same!" In this case, there is no difference in how the accounting offsets assets and liabilities.

Except this is clouding the actual truth. As a mutual fund, you are purchasing actual pieces of a company, REAL product with real cash. In the case of SS, you are taking DEBT (that money you collected is OWED to the people) and using that debt to purchase government loans. In essence, as QW has pointed out, you are covering the debt up by moving down the line. Sure, in the mutual funds case, the debt cancels out BUT what you are left with is property that is valued at the initial investment. In the SS fund example, what you are left with is a future debt in value of the initial investment. The surplus was an accounting trick that hides actual debts owed. To his credit, this is not Clintons doing. That is simply the way that the books have been kept. That does not make it right however and IT DOES NOT ERASE THE FACT THE MONEY IS OWED. That is why the actual debt increased.

 

[PLYMCO_PILGRIM]

Barbie, now that it has been proven that both your character and your knowledge have both reached their nadir, on what possible basis would I entertain any questions from you?

Henceforth, Barbie, you will merely be relegated to the pigeon hole of comic relief/human piñata.

NYC, walk away dude you look really bad in this exchange. I dont know what went on in the other thread but you look really bad in light of all that has been said in this thread.

And yes clinton still added to the national debt every year and yes clintons budgets had a surplus.

Ah, yes, a wingnut is telling me I look bad in an exchange where the facts are on my side and the personal attacks are on the other.

Mind your own business.

Maybe I should have said you are wrong and your making yourself look bad by pushing your bad information in the process.

Oh and yeah you calling me a wingnut doesn't diminsh the fact that you look bad in light fo the fact that clinton did add to the national debt every year (or to make it worded better for you the national debt grew every year under clinton) yet you run around acting like he didn't because of a "budget surplus". Government - Historical Debt Outstanding - Annual 1950 - 1999

 

[Toro]

Toro, why are you arguing with her? You are assuming she will respond to a logical and wll thought out argument. She won't. She is plenty smart enough to understand what you have said but she and Windbag get jollies pulling peoples chains by ignoring posts thet completely understand.

One point I would like you to comment on. Windbags assertion that revenue rose from the act of selling T-Bills and not from revenue collection. I haven't seen a clear explanation or rebuttal of that point which is interesting. Meaningless because on a percentage basis it would be miniscule but interesting.

He's confused. We did not increase revenues because we sold T bonds. What he's trying to say is that payroll taxes surged, causing a surplus in the SS trusts, which were then used to buy back T bonds, not sell them. The criticism at the time was that the trust surpluses were not used to strengthen SS, which is a fair criticism. Instead they were used to pay down the general debt of the US Treasury.

 

[Toro]

"...does not mean he is knowledgable about the topic."

To anyone who notes that the debt continues to climb, it is more than counterintuitve to claim that there could be a real surplus.

No matter his vocation, it is his argument that makes more sense than the counter. You, of course, may define a surplus into existence...but that hardly means that one exists.

Economics is not a science, although euphemistically called the 'dismal science,' as is indicated by your attempts to use same to show that the debt increases, but there is a surplus...

I understand how an individual who is not trained in financial analysis nor understands government accounting would think it is counterintuitive that a rise in total gross government debt would imply a deficit. But bear with me.

I asked you the question earlier about what happens to the gross nontradable liabilities of the Treasury when there is a surge in employment and payroll tax receipts? Do you think such liabilities would go up or down? Intuitively, one would think they would fall, right? After all, a rise in receipts should mean a fall in liabilities. In fact, it is just the opposite. Gross nontradable liabilities rise when there is a surge in payroll tax receipts.

Think of a mutual fund company that runs your 401k. Let's say you contribute $1000 a month to your 401k. At the end of the year, because you're such a good worker, you get a $10,000 bonus. Being the smart and responsible woman that you are, you put $5000 of your bonus into your 401k. The cash is sent to your mutual fund company and the mutual fund now owes you an extra $5000 on top of the $12,000 you socked away during the year. So for the year, the mutual fund owes you $17,000 (plus whatever your investments gained or lost, which for simplicity's sake, we'll assume is $0 for the year).

Now STOP!

At this point, is the mutual fund better or worse off? After all, it now owes you $17,000? After all, the gross debt of the mutual fund company has risen because it owes you another $17,000. So it must be worse off, right?

This is where you stop in your analysis of the government debt. It is incomplete.

Of course, the answer to the above question is "no." A mutual fund contracts with a management company, which invests your money. The mutual fund company has a liability with you but the $17,000 it has invested with the management company is an asset. Net net, they balance out. The mutual fund company owes you $17,000 but has a $17,000 asset with the management company. So its gross debt rises by $17,000 but its net worth does not change.

It is the same with the government. When SS receipts rise, the gross liabilities of the Treasury rises because it owes you the money (plus interest) it has received from you in payroll taxes. But that doesn't mean the Treasury is worse off because it has an asset in the social security trust. Net net, there is no change in the balance to the Treasury. The Treasury is credited with the amount taken through payroll taxes but those funds are debited to the social security trusts. They offset. That's what you are seeing when total debt rises. It doesn't take into account changes on the other side of the balance sheet, and has no bearing on cash inflows and outflows through the Treasury. Cash inflows exceeded cash expenses in the last part of the 90s. That is the definition of a surplus.

I get that this is a confusing and counterintuitive issue. And I expect someone who is dug too deep in the argument and confused like QW to pipe in that "Government accounting is not the same!" In this case, there is no difference in how the accounting offsets assets and liabilities.

Except this is clouding the actual truth. As a mutual fund, you are purchasing actual pieces of a company, REAL product with real cash. In the case of SS, you are taking DEBT (that money you collected is OWED to the people) and using that debt to purchase government loans. In essence, as QW has pointed out, you are covering the debt up by moving down the line. Sure, in the mutual funds case, the debt cancels out BUT what you are left with is property that is valued at the initial investment. In the SS fund example, what you are left with is a future debt in value of the initial investment. The surplus was an accounting trick that hides actual debts owed. To his credit, this is not Clintons doing. That is simply the way that the books have been kept. That does not make it right however and IT DOES NOT ERASE THE FACT THE MONEY IS OWED. That is why the actual debt increased.

If the mutual fund is a money market fund or a government bond fund, the analogy works exactly the same.

SS is like a mutual fund that invests entirely in government bonds. As someone who has spent nearly two decades working in the investment business, I would tell you that this is a very suboptimal way of structuring your retirement savings. SS as constructed is about the last way I would design a pension fund.

People get confused and say things like "we owe it to ourselves." But virtually every single bank, pension fund, mutual fund, insurance company, hedge fund, large company, etc owns Treasury debt. All those institutions make up the collective savings of the country. It makes no difference whatsoever from an economic standpoint if a mutual fund invests your money in a government bond fund or the government invests your money in a government bond fund.

 

[Toro]

No I am assuming Toro's post makes sense. I would add my example of how I increased my debt today by borrowing against my home to pay a future liability (college) was a credible example of running a surplus and increasing debt. Something you and Chic refuse to acknowledge although I am certain you are both smart enough to understand.

I do find your point of falsifying revenues interesting and would like Toro's comment. Again even if it is true I suspect it is trivial. If you would like I can change the thread title to "understanding the arcane dynamics of government accounting".

Except that you are not running a surplus because that loan does not count as revenue/income. I think Toro and I have reached the point where we disagree, and have moved on. He has no real problem with the government counting loans as revenue, and I agree with him that it is a legitimate practice for them. I just refuse to count that revenue toward the surplus/deficit because it is not revenue the government gets from outside itself.

Understand that I am just assuming that Toro has decided not to continue the debate with me because it is his way of not getting bogged down in minutiae. It could be he reached the conclusion that I am completely bonkers and decided to stop wasting his time.

I don't think you're completely bonkers. But we didn't count loans as revenues. Instead, we had a surge in payroll taxes which were used to pay down the debt. If you want to say that we didn't have a surplus if you exclude the surpluses in the trusts, I would agree with you. But a surplus is defined as revenues exceeding expenditures, which is what happened in the 90s. And extrapolating a rise in the national debt and concluding we had a deficit is incorrect. That's why you don't have conservatives with financial knowledge making this argument.

 

[NYcarbineer]

NYC, walk away dude you look really bad in this exchange. I dont know what went on in the other thread but you look really bad in light of all that has been said in this thread.

And yes clinton still added to the national debt every year and yes clintons budgets had a surplus.

Ah, yes, a wingnut is telling me I look bad in an exchange where the facts are on my side and the personal attacks are on the other.

Mind your own business.

Maybe I should have said you are wrong and your making yourself look bad by pushing your bad information in the process.

Oh and yeah you calling me a wingnut doesn't diminsh the fact that you look bad in light fo the fact that clinton did add to the national debt every year (or to make it worded better for you the national debt grew every year under clinton) yet you run around acting like he didn't because of a "budget surplus". Government - Historical Debt Outstanding - Annual 1950 - 1999

My information was that the national debt includes off-budget items so Clinton could balance the BUDGET and that is reflected in the lower year over year public debt figures.

The other poster is falsely making the argument that because 'national debt' figures rose every year,

Clinton could not have had any balanced budgets.

YOU know that's false, you know she's wrong, and yet, you're giving me shit. Why aren't you giving HER shit? What the **** is wrong with you?

 

[NYcarbineer]

Do I actually have to explain this to you?

Clinton and Newt got together and decided to lie to everyone about everything. They decided that Clinton would get to claim that the budget was running a surplus, and the Republicans would get to claim they kept their Contract with America to reduce the size of the government. this made everyone in DC happy because they got to lie to their base, and the base was happy because they liked the lies they were hearing.

Once you learn that there is no difference between the tow parties you will be on your way to being able to understand how the government really works, and maybe even throwing off the shackles. Why do you think both parties hope the Tea Party just disappears? Those idiots want the politicians to actually keep their promises and stop lying to everyone, and only care that government spending and the debt go down, even if it means putting a bunch if radicals that think a balanced budget amendment is a good idea into Congress.

Who made this tale up?

For how many years has the Social Security trust fund invested its revenues in treasuries?

I honestly do not know. I will point out that the fact that they have been doing it for years does not make it right. If it actually worked that way we would still have slavery, and you would not even be able to talk about same sex marriage.

Where is the evidence for the underlying insinuation that Clinton did something unique that no other president ever did before or since?