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Clinton surplus fact/fiction?

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p3tr0n1us posted on Tue, Feb 2 2010 8:26 PM

Sennholz's article ( addresses manipulation of trust funds to produce a 'federal surplus' under Clinton adminitration. His data is from 1998-2005 -- for estimated trust fund surpluses says that the federal budget was balanced and deficit erased under Clinton ( "The debt the government owes to the public decreased for a while under Clinton, but the debt was by no means erased." (emphasis added)

Can Sennholz's numbers be generated from the data on FactCheck, and how to reconcile the claims of each? PLEASE RESPOND, I'm trying to learn here. Write as much as you need to, I will read it.

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Non-existent budget surpluses

Posted: February 07, 2002
By Harry Browne
© 2010


"President Bush has sent Congress a $2.12 trillion budget. It might appropriately be titled, "We're All Big Spenders Now."

Of course, neither President Bush nor members of Congress are the least bit alarmed by the size of the budget. All the attention is focused on the supposed disappearance of those wonderful budget surpluses. Congressmen who have never given a thought to fiscal prudence are suddenly distressed that the government will be squandering trillions of dollars of surpluses it was supposed to enjoy over the next 10 years.

But they needn't get so exercised. In reality, there hasn't been a true federal surplus since the Eisenhower administration – nor a surplus large enough to be worthy of its name since the 1920s.


Since its inception, Social Security has taken in more money every year than it's paid out to Social Security recipients.

So the Social Security administration lends the excess money to the U.S. Treasury to cover the Treasury's budget deficits. The reasoning is that it's better to keep those reserves in Treasury bonds than to play the horses with them.

For the first 30 years of Social Security, its accounting was kept separate from the regular federal budget. But in the late 1960s, the politicians decided the chronic budget deficits wouldn't look so large if they counted the excess of Social Security receipts as regular budget receipts.

(Have you noticed how upset politicians get when some private company dips into its employees' pension funds? Well, they've been dipping into the retirement funds of their "employee" taxpayers since the 1960s.)

Even with this shell game, the budget deficits persisted, but they were no longer so huge.

Nirvana arrives

And, lo and behold, as of 1998 this creative accounting finally produced a series of budget "surpluses."

In the process, the politicians claimed that two contradictory events were occurring at the same time:

  1. The federal budget was finally in surplus.
  2. The Social Security trust fund was absolutely safe – stashed away in a "lock box," in Al Gore's immortal words.

However, any householder knows that if you run a surplus, your debt diminishes. If your debt is rising, you must be running a deficit.

And here's what's happened to the federal debt over the past 5 years:

  • In 1997, the federal debt was $5.370 trillion.
  • In 1998, it increased by $109 billion to $5.479 trillion.
  • In 1999, it increased by $127 billion to $5.606 trillion.
  • In 2000, it increased by $23 billion to $5.629 trillion.
  • In 2001 it increased by $141 billion to $5.770 trillion.

How could there be surpluses if the debt is rising every year?

(These statistics are available at the website for Economic Indicators, a government publication produced by the Joint Economic Committee of Congress.)

Can't have it both ways

Perhaps the politicians should count excess Social Security receipts as regular budget receipts. But if so, they can't say that Social Security is safe – because the trust fund is being squandered. And when the Baby Boomers retire, they will quickly run through the remaining Social Security reserves – leaving later generations with nothing for all the money they've put into Social Security.

Or maybe it's OK to say that Social Security is safe. After all, the Social Security administration gets Treasury bonds in exchange for those excess receipts. But if so, then it's obvious that there are no budget surpluses – just more and more deficits.

Whichever way you choose to count things, the politicians are lying – either about the surpluses or about the safety of Social Security.

You'd think the politicians' creative accounting constitutes an interesting fiscal scandal, but who in politics or the press is interested in calling attention to it? Do you know of a single politician who hasn't joined in the self-congratulation about the "budget surpluses"? Do you know of a single journalist who's pointed out that the Emperor's budget has no clothes?


And, oh yes, these politicians who have been lying about the federal budget and Social Security for so many years?

They're the same ones on whom we rely for news about the progress of the War on Terrorism."


Regards, onebornfree

For more information about onebornfree, please see profile.[ i.e. click on forum name "onebornfree"].

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should have known Harry Browne would have had something good to say about this...thank you!

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should have known Harry Browne would have had something good to say about this...thank you!

You are welcome. Here's another Harry classic which mentions the same issue [ among others] :

Top 10 misconceptions about government

By Harry Browne 2001.
© 2010

When people argue for or against some new government program, a lot of what's said is based on assumptions about government that just aren't so.

Direct from the home office in the slums of Washington, D.C., here are the top 10 misconceptions commonly peddled about government today. ...

The budget and Social Security

Misconception No. 10: "The federal budget has been in surplus since 1998."

Not so. The federal debt increased by $109 billion in 1998, by $127 billion in 1999, and by $23 billion in 2000.

The politicians are taking excess Social Security receipts and using them to cover spending on foreign aid, corporate welfare, and thousands of other boondoggles. Lumping Social Security in with the general budget transforms a budget deficit into a surplus – but the federal debt continues to get larger and will have to be repaid someday.

Misconception No. 9: "The politicians are keeping Social Security funds separate and safe."

See Misconception No. 10. Even as politicians posture that they're protecting Social Security, they're stealing from it in order to hide the budget deficits. So long as Republicans and Democrats continue to peddle this lie, they're demonstrating that you shouldn't believe anything they say.

Federal programs

Misconception No. 8: "The Republicans prevented a takeover of health care by the federal government in 1994."

The Republican Congress has already enacted a large part of HillaryCare. Today half of all health-care dollars in America are spent by government, and another 20 percent by health-care plans that might not exist if it weren't for the income tax code.

HillaryCare is a bogeyman raised by one party to persuade you it isn't as bad as the other party.

Misconception No. 7: "The federal highway system allows poor states to have roads as good as those of the richer states."

The truth is just the opposite. The federal highway program allows the richer, more powerful states to plunder the poor states.

A main recipient of highway funds is Pennsylvania. Why Pennsylvania? Because the chairman of the House Transportation Committee is Bud Shuster of Pennsylvania.

The people in states like Alabama or Montana are taxed so that congressmen and senators can reward friends with contracts for a $2-billion subway system in Miami that doesn't work, a "People Mover" in Detroit that hardly anyone uses because it goes hardly anywhere, a billion-dollar airport in Denver that no one but the Denver mayor wanted. These are "your highway dollars at work."

Intruding on your life

Misconception No. 6: "The defeat of the 'Know Your Customer' program in 1999 stopped banks from spying on you."

Not so. Banks have been required to report large or suspicious transactions since 1970. And the definition of "suspicious" has included more transactions every year.

Now the government has expanded the reporting to include private financial companies. And the Post Office

has a surveillance program called "Under the Eagle's Eye." Big Brother is watching you.

Misconception No. 5: "The problems created by the drug war are necessary to hold down drug use."

To believe that, you have to believe that only the drug laws keep you and me and everyone you know from shooting up heroin. Otherwise, how could drug use be much greater than it is now?

Any teen-ager can get drugs just by asking around at school. Since 1972 the U.S. government's National Institute on Drug Abuse has surveyed teen-age drug use – which in every major category has doubled, tripled, or quadrupled.

We have lost the Constitution and its Bill of Rights, innocent people have been sentenced to life imprisonment on the say-so of admitted drug dealers seeking reduced sentences, the drug business has been taken from legitimate pharmaceutical companies and turned over to criminal gangs, the politicians have played with hundreds of billions of dollars of our money. And all this has led to greater drug use – not less.


Misconception No. 4: "The government keeps the environment clean."

A 1999 Boston Globe investigation concluded that the U.S. government is the worst polluter in America. And most of the rest of pollution occurs on government property – in government lakes and rivers, and on government land.

Private owners worry about the future value of their property, so they're careful not to pollute their own assets. But the future is of no concern when they use government property. So there's tremendous pollution on government property, where bureaucrats have no personal stake in protecting it.

The best answer for pollution is to get as much property out of the hands of government as possible. Then the remaining pollution problems shouldn't require the oppressive regulatory nightmare being imposed today by politicians, bureaucrats and social reformers.

Misconception No. 3: "Government regulation saves lives by making medicines safe."

The Food and Drug Administration (FDA) has routinely kept life-saving medicines off the market for years until its administrators were positive they couldn't be held responsible for a single death.

Robert Goldberg of Brandeis University has estimated that FDA delays in approving drugs already used safely in other countries have cost at least 200,000 American lives over the past 30 years. These delays killed Alzheimer patients who weren't allowed to take THA, people with high blood pressure who couldn't get beta-blockers, kidney-cancer patients deprived of Interleukin-2, and AIDS patients who died waiting for AZT


For true safety, we rely on doctors, research labs, insurance companies and other private agencies to determine what's appropriate for each individual, not what is politically safe for the regulators. Doctors sometimes make mistakes, but they don't make decisions on a political basis.

Why we tolerate government

Misconception No. 2: "We have to tolerate the bad things government does in exchange for the protection it provides against violence – domestic and foreign."

Far from protecting us from violence, the government seems to be the foremost cause of it. Its drug war has spawned inner-city chaos and gang warfare, and its SWAT teams kill innocent people during mistaken drug raids. Government doesn't protect our children in the schools, it doesn't protect adults on the streets, and depending on 911 for protection makes as much sense as relying on the lottery for your income.

Overseas it is our government that's roaming the world stirring up trouble. It has killed hundreds of thousands of Iraqi adults and children by forcibly preventing them from getting food and medicines. It subsidized the Afghan "freedom fighters" in the 1980s, but now claims those same "freedom fighters" are a main source of terrorism in the world. It bombed innocent people in Serbia to aid the Albanians – the same Albanians it now wants NATO to attack.

Some protection. No wonder the U.S. is the main target of terrorists.

Here it comes ...

And by far the No. 1 misconception about government issssss ...

Misconception No. 1: "The next government program will work the way its sponsors promise."

The government's war on poverty has transformed poverty from a short-term misfortune into a career choice. Its war on drugs has escalated drug use. Medicare has made health care more expensive and less accessible for senior citizens. Nothing the politicians have enacted has turned out as promised, and most programs have made matters worse.

So do you really believe George Bush's voucher program will make education better – or his "faith-based" charity plan will make welfare work? Do you think the Democrats' prescription-drug program will make medicines easier to obtain? Or John McCain's campaign-finance bill will make politics cleaner?

If you believe any of that, consider buying a marvelous bridge I own in Brooklyn.

The solution to today's problems isn't to pass more government programs – or to reform government programs – or to get better people to manage them. The answer is to end completely all these government programs that have caused so much misery, waste, corruption and tyranny. Get government entirely out of health care, education, welfare, drugs, policing the world, and anything else not specifically authorized in the Constitution.

The worst misconception of all is the idea that government will give you what you want.

Regards, onebornfree.


For more information about onebornfree, please see profile.[ i.e. click on forum name "onebornfree"].

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When was the last genuine surplus? What was the last year the government did not have to borrow? Truman? Jackson?

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Sieben replied on Tue, Sep 21 2010 10:05 PM

  • In 1997, the federal debt was $5.370 trillion.
  • In 1998, it increased by $109 billion to $5.479 trillion.
  • In 1999, it increased by $127 billion to $5.606 trillion.
  • In 2000, it increased by $23 billion to $5.629 trillion.
  • In 2001 it increased by $141 billion to $5.770 trillion.
Couldn't it technically be shrinking if we're inflating faster than 1%?
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Oh - what I would give to be able to say again the federal budget is only out of balance because of Social Security surpluses.


Just sayin'

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