Budget Surplus Question

[jmags]

I'm in a discussion with someone about the current deficit, who has told me something that I've never heard of. Basically, he said we never really had a surplus and only borrowed from SS to make the appearance of a surplus. Now, I'm going to ask for some proof from him to back the statement up, but anyone know of good articles to show how the surplus was achieved? Also, anyone know of any links to show which countries we are paying interest too?

[MrJones]

1. It's not true.

This from http://www.cnn.com/2000/ALLPOLITICS/stories/09/27/clinton.surplus/ -
President Clinton announced Wednesday that the federal budget surplus for fiscal year 2000 amounted to at least $230 billion, making it the largest in U.S. history and topping last year's record surplus of $122.7 billion.
The federal budget surplus for fiscal year 1999 was $122.7 billion, and $69.2 billion for fiscal year 1998. Those back-to-back surpluses, the first since 1957, allowed the Treasury to pay down $138 billion in national debt.

Then from http://www.cnn.com/2001/ALLPOLITICS/08/28/budget/ -
This year's federal budget surplus has plunged to $153 billion because of the nation's economic doldrums and the Bush administration's tax cut, meaning the federal government will have to cover $9 billion of spending by dipping into Social Security, the nonpartisan Congressional Budget Office projected Tuesday.

I'm having a hard time finding the numbers on the actual SS surpluses for those years, but for FY 2000 it was about $147B, compared to a $230B overall surplus. Bascially, what I found the last time I researched this was that the 1998 "surplus" wasn't really a surplus if you didn't count the Social Security trust fund surplus, but the 1999 and 2000 surpluses were.

[papau]

3. Data at www..bea.doc.gov and irs.gov and SSA.gov

Debt pay down in fiscal (10/1 to 9/30) 99 and 98 is less than total SS surplus in those years - so "National Debt" rose.

National Debt also rose in "fiscal" 2000 - but Calendar 2000 saw the first decrease in National debt that I can remember.

[papau]

2. Only one calender year of real surplus 1/1/2000 to 12/31/2000

Check the monthly National Debt totals

Stealing from SS does not decrease the National Debt - the SS system is given government bonds to replace money stolen and these count as part of National Debt.

But for one happly Clinton year we actually decrease the National Debt - meaning the SS surplus was "lock-boxed" - which means it was used to reduced other National Debt as the Bonds were instead issued to SS - so there was no net increase in the National Debt from the bonds issued to SS for the SS payroll tax surplus

AND FIT surplus existed so as to reduced further the National Debt.

Now Clinton had a few "surplus" years - but as your friend said, they were SS payroll surplus - ONLY - years -and National Debt actually increased.

But calendar 2000 had a decrease. Indeed this is why Bush had calendar numbers removed (you have to use monthly numbers in the spreadsheets that you can download). Bush has put up only Fiscal Year -10/1 to 9/30 - numbers on the web pages, since he was able to destroy the 10/1/2000 to 9/30/2001 fiscal year numbers by passing additional spending and by cutting taxes and having his early IRS refund program by sending out checks in summer 2001.

[sandlapper]

6. When did the National Debt decrease

09/30/2002 $6,228,235,965,597.16
09/28/2001 $5,807,463,412,200.06
09/29/2000 $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
09/29/1989 $2,857,430,960,187.32
09/30/1988 $2,602,337,712,041.16
09/30/1987 $2,350,276,890,953.00

The figures above come from http://www.publicdebt.treas.gov/opd/opdpenny.htm?id=8569262

[Bluecoller]

8. gross debt is different

The treasury chart is showing the gross federal debt, which doesn't mean shit.
The gross debt includes special bonds held by the social security, and other
trust funds on which we pay no tax money for interest. The only debt we pay
interest on, is the debt held by the public. (see message #7 below)

For instance: In the year 2000 we had a SS surplus of $151.8 billion. Most of
this money was used to pay down the debt held by the public, then the treasury
issues special bonds to the SS trust fund which then increases the gross debt.

The debt held by the public is the only debt on which we have to pay interest with
our tax dollars. Now, don't you feel better, we only owe about half as much as you
thought we did. :shrug:



---=- IRAQ IS INNOCENT of 911---

-bush shit his pants on 911-

-------------- bluecoller-the grumpy old kraut ----:mad:

[papau]

12. Calendar year does not begin on 9/30 - read the spreadsheets

for 1/1 to 12/31 data

Note the drop in year called "2000"

Say you are sorry (now this I do not expect! :-) )

[Code_Name_D]

4. Yes, it was only a paper surplus.

Make no mestake however, it was still quite an achivment just doing that, considering just how large the debt truly is. And he DID balance the budget. Something the prepublicans arn't even trying to do.

But Clintion was more lucky than he was smart as he had two eliments come to his aid. First, was the SS "lock box" which he tossed into the deficit. And second was something called the "wealth effect." As the markets esculated, the taxes on capital gains yealed larger than estimated sums into the tresurery, building to the suprluses.

But long term figures still looked bleak. Especualy in the SS area where the money was already "alocated" to the budget.

Sad to say that your debating partner is quit correct in his assertions.

[TreasonousBastard]

5. Sorry that I don't have time to look up a few things...

but key to any discussion of deficits is to understand how they throw things "off budget." SS is the largest off budget item, but there are other entitlements that add up to a lot of money and don't show up in the budget surplus/deficit figures.

They also bounce certain receipts and expenditures back and forth between fiscal years to make things look better. This, btw, is highly illegal if a corporation were to try it.

'tis a bit of work, but some day I would like to try adding up actual total "earned income" from all sources and total expenditures to get an idea of the actual Federal cash flow.

I'm sure the number would be interesting.

[Bluecoller]

7. you're friend was ALMOST right!

However we did have two years of surplus without counting the RAID on social security.
(see table F-2 --on-budget)
If we count the SS surplus, we then had four years in total surplus.
(see table F-2 --total)

http://www.cbo.gov/showdoc.cfm?index=4032&sequence=12&from=0


table F-2
---------------------------------Surplus or Deficit -------------
---------------------------------------------------------------------------------
----------------------------------------------------------Debt Held by
----------on budget-----social security------total----------the public--
1997----(-103.3)-------( +81.3) ----------( -22.0)----------3,772.3
1998-----( -30.0)-------( +99.0)-----------(+69.2)----------3,721.1
1999-----( + 1.9)------(+124.7)---------(+125.6)----------3,632.4
2000-----( +86.6)-----(+151.8)---------(+236.4)----------3,409.8
2001------( -33.4)-----(+163.0)---------(+127.3)----------3,319.8
2002-----(-317.5)-----(+160.3)---------( -157.8)----------3,540.4



---=- IRAQ IS INNOCENT of 911---

-bush shit his pants on 911-:hurts:

-------------- bluecoller-the grumpy old kraut ----:mad:

[papau]

14. Debt held by public decreases over 2 years - Total Debt decrease 1 yr.

National Debt - Total Debt - the amount of FIT needed to be raised in the future if we are to honor the outstanding government bonds - decreased in 2000.

[phgnome]

9. I heard one time

That the budget was so large that the whole GDP for a year could only pay off the interest.

My boyfriend was telling me that "Clinton balanced the budget". I looked at him with some skepticism because it didn't really make sense to me. How did Clinton manage to pay off a 7 trillion dollar deficit? Where did the money come from -- 7 trillion in the early '90s is a heaping amount of money? It just didn't sound physically possible. Doesn't matter how good of a leader he was -- it just doesn't seem possible to pay it off in less than a decade, much less run a surplus.

I've heard that countries sometimes go to war with their creditors to erase the debt. I hope we aren't doing this for the sake of saying we had a "balanced budget". That wouldn't be good.

Does anyone know of any articles to say how this trillions debt was paid off by Clinton? Is there a breakdown of the numbers somewhere?

[German-Lefty]

10. deficit != debt

Balancing the budget is not the same thing as paying off the deficit. The deficit is big check it out:
http://www.brillig.com/debt_clock/

Balancing the budget means paying at least the intrest and maybe some of the priciple of the debt. A budget surplus or deficit (its negative) is considered the rate of change of the debt.

This discussion is about wether there was a surplus when you count social securitiy entitlements as part of the debt as well. This is important since it is expected that when the baby boom retires we'll have to pay out 10s of trillions and nobody has a real idea where that money is going to come from. Proably from selling our generation into slaver :-(

[phgnome]

15. Debt vs. deficit

Thanks for clarifying, Lefty -- it clears up a lot of confusion I was having reading about the deficit and debt.

[rapier]

11. essentially true

FIrst off we ALWAYS borrow the SS surplus for current use. In return the SS 'trust fund' gets special government bonds.

So all deficit and surplus calculations include the surplus SS payments flowing in which are currently around $250 billion I think. So to get a more honest number you MUST subtract this borrowing.

The surpluses started in 84 when witholding taxes shot up. Until then SS had been pay as you go and it was on the brink of costing directly from every years budget that forced the increase. THe writers of this SS reform, or at least the GOP ones knew it would allow the annual deficits to be less, reportedly. The real canny ones knew that the money would never be paid back.

Say goodby to SS really. It's dead. Oh, it will pay a bit down the road. In all likelyhood it will pay current rates while inflation has increased the cost of things a few hundered percent. If not that it will be simple default. If the GOP stays in charge that will by by 2010.

[papau]

13. FIT increases needed to get money to retire SS Bonds - only if no

future FIT increase to get those funds is SS in trouble before 2043.

A 30% reduction in 2043 will occur in the benefit payment made for a given salary history (meaning the normal retirement age will be raised to 70).

Where do you get this crap that SS is in trouble?

Does no one read the SSA Trustees report, or the SSA Actuary's projections? It is like GOP lies are accepted as Truth when it comes to Social Security.

[rapier]

16. notes

I admit I am mouthing the GOP spin. But that spin is in effect the reality. They want, in the worst way, to kill off SS. Kill it dead. The groundwork has been laid. Everyone THINKS it might collapse.

Remember the calculations on 2043 or some such assume that the 'trust fund, held as I said in special government bonds, will be paid. To pay those we will have to use funds from general revenues.

Those 'bonds' will be defaulted on. The wacky Treasury Secretary O'neil said so once. Then, a few days latter he said, well, never mind. He didn't understand that there is a legal assumption that the SS 'trust funds' special bonds have the same backing of any US Treasury security. That being the full faith and credit of the US.

Now one might think that a Treasury Secretary would know about the status of these bonds. But alas, he didn't. Instead he knew only the ideology, which is enough. It is interesting that when the Treasury Secretary announced that the US Treasury would default on its oblications that the worlds markets, particularly the US government bond market didnt' even blink. Why is that. Well as I said these are not regular bonds. In O'Neils words "it's money we owe to ourselves" Of course money owned to poor pathetic odinary citizen peons is beyond the interests of the financial markets. My conclusion is that the financial markets would be more than happy if Uncle Sam defaults on the SS bonds.

And default they will.

EIther that or benefits will stagnate or fall as inflation rises.

THe SS trust fund is just one of many unfunded liabilites that Uncle Sam has, to the tune of over $30 trillion. Now many of these liabilities are contingent. Contingent upon defaults or problems in various programs. In any case there is no way we can pay ANY of these liabilites if the contingencies develop. The SS trust fund is not contignet. It is inevitable that it will have to be tapped. Thus the 20 year PR campaign getting people ready for the "crisis" when with much gnashing of teeth and wailing SS will be killed.

It is a done deal. The annual deficts as we know are spinning totally out of control. With the demands of permanent war cuts will have to be made, (tee hee) SS is first on the block.