There Really Was No 'Clinton Surplus'

Author: Vale

If you tell a lie big enough and keep repeating it, people will eventually come to believe it

- unknown*

there is no spoon
What if I told you a political belief held widely by both Democrats and Republicans (and likely you) for about 15 years was completely false? Would you continue reading or would you stop right when you got to the claim? When you get to the claim, are you going to label me an extremist and move on, or attempt to read and perhaps challenge the arguments?

I preface this article like this because this belief is so dear to many people’s hearts that it would turn their dogma upside down to find out it was all smoke and mirrors. I used to believe it myself until I took a look at the actual data.


So let's get right to it: There was no budget surplus under Clinton.

But before jumping to the evidence, why is it “known” to be a fact that Clinton had a surplus? Well the media made the surplus claim endlessly (and they never lie, right?), multiple media sources have 'fact checked' it, and even ‘proved’ it to be true. So what is going on? In all cases they source the ‘non-partisan’ Congressional Budget Office (CBO). The CBO claimed a surplus, and from then on it became gospel. Like the opening quote, after one hears something enough, they begin to believe it, which explains why political advertising continues to hammer messages into voter’s heads, incorrect or not. 

The refutation proof is very simple, just look at that national debt tables. In no year of Clinton’s presidency did the national debt go down (which is a necessary and sufficient condition for a budget surplus):

Table I. U.S. National Debt 2000-2012



Table II. U.S. National Debt 1992-1999


The conclusion is INDISPUTABLE. I am sure there will be some people who will try to weasel out of the truth, but the fact remains that the national debt never decreased from year to year during Clinton's presidency, which is what would have happened if the government were indeed running a budget surplus. So how did the government claim a surplus? The key to the mystery here is that the national debt is comprised of public debt (where private investors give money to the government to be repaid back later) and intra-governmental holdings (where taxpayers contribute money for a future benefit and consist of obligations such as the Social Security trust, the Civil Service Retirement and Disability Fund, etc). To the U.S. citizen taxpayer, it is all the same and it does not matter which category the debt goes into, because regardless of the category, it is a debt liability for the U.S government that the taxpayer is ultimately liable for. Essentially, the surplus chicanery was an accounting mechanism where more money was borrowed from Social Security and the other trusts and used to pay down public debt, hence facilitating the illusion. Government debt goes up - Public debt goes down and that is what masquerades as a surplus, boys and girls.



*often incorrectly attributed to Joseph Goebbels 


# Beethoven 2013-12-28 07:18
The quote at the beginning of this article

"If you tell a lie big enough and keep repeating it, people will eventually come to believe it."

Is by Hitler's minister of propaganda Joseph Goebbels.
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# Frov 2013-09-16 14:21
I wouldn't say the proof is irrefutable. I'm by no means saying there was a surplus or a Clinton/Dem fanboy. I'm curious what the interest expense was for those years that a surplus is claimed. If they budget X and revenue is Y and Y>X then yes, there is a surplus. If it all goes to the interest and there's more interest left over, that doesn't mean that, for that specific year, the gov didn't operate at less than revenue and didn't generate a surplus. Also, was any of that surplus held as cash? Does the national debt net the gov assets against it to determine the true debt, or does it just count all the liabilities and leave it at that?

If you're going to say there was no surplus, because it wasn't used for the specific purpose of paying the multiple different types of debt down, while other places report that there was a surplus because revenues exceeded expenses, then you have to prove where that difference is coming from and why it is false.

This site claims that even under accruel accounting, there would be a surplus. And again, just because they didn't spend it to a matching expenses or use it to pay down debt, doesn't mean that the interest accrued/capital ized was greater than the surplus, or that the surplus was held as cash with no matching expense.
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+2 # Vale 2013-09-17 11:02
The budget is simply income minus spending. If and only if there is more spending than income, then there is a deficit. If and only if there is a deficit, then the national debt increases. Ergo, the national debt increased, therefore there was a deficit.

It doesn't matter what the interest expense is, because it is still spending. Think about it this way, if 100% of all income went to paying interest expense, would you claim a surplus? No.
And it is not an expectation of what they budget. They could 'budget' 10 trillion dollars each year and have a 7 trillion dollar surplus, but that's still not a surplus.

If there is any money left over, the only place it can go is to the national debt. Either they pay down the debt, or they spend it. If they spend more than they take in as income, they have to borrow and that comes from the national debt. There is no other place.

The Factcheck organizations are playing the same game that the CBO is by ignoring the intra-governmen tal holdings (which is still about half of the national debt), which is the accounting mechanism that they use for their claims. Public debt decreased, intra-governmen tal debt increased and net balance was an increase in the national debt. No matter which way one tries to spin it, the national debt doesn't lie. Its similar to when a corporation tries to fake earnings. They can come up with all kinds of clever accounting mechanisms, but the amount of cash a corporation holds can't be fudged.

Read their Feb 2011 update: "So the debt goes up in any given year by the amount of the deficit, or it decreases by the amount of any surplus." They just admitted that there was no surplus... because the debt increased every year.
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