Thank you for answering. I appreciate it.
Now, another question: how did Clinton cook the books? He’s not in charge of the books, and a lot of very smart people went along with his plans.
Because the huge surpluses that the White House claimed were borrowed from trust funds which need to be paid back. Most of the money was spent on reducing the public debt but some of it was spent in normal government operations. Which means the intergovernmental debt increased more than the public debt decreased and there was no surplus. A clever scheme but very misleading and dishonest.
Consider a case where I’m involved in two loan transactions.
Loan #1) I loan Bob $5
Loan #2) Joe loans me $5
As a result of these loans my debt has increased by $5 (the $5 I owe Joe)
But importantly, my net assets are unchanged (because I am owed $5 by Bob).
When a government loans money to itself, its debt increases, but its net assets don’t change because the increase in debt has to be exactly offset by an equal increase in assets.
You can argue that paying down the public debt less than the Social Security surpluses represents poor financial planning. But by normal definitions, Clinton had surplus budgets.
If every president in the history of our country used the exact same standards for reporting the assets and liabilities of the United States Government, how does that qualify as “cooking the books?” Or are you saying that Clinton used a different accounting standard than previous presidents, and then Bush and Obama have gone on to use a different accounting standard than Clinton?
Finally, if the books are cooked, how is it that you, a layman in these matters, have managed to uncover this “fraud” with just a few seconds’ worth of googling?
I repeat my question again: if you think having a large balance in the Social Security Trust Fund is a bad thing, and having a small balance in the Social Security Trust Fund is a bad thing, why should we take your criticism of Trust Fund operations seriously?
This thread is embarrassing to read. It’s weird that the inability to understand this, on this board at least, is a conservative / liberal thing.
Meh, let’s be reasonable. The conservatives who understand it probably aren’t getting involved because they’d rather stay silent than support Clinton, and there’s enough liberals who understand it to explain. The liberals who don’t understand it probably aren’t getting involved because even if they don’t get the accounting, it’s saying something good about Clinton and why would they argue against that?
A small child could understand it.
If in a given year you earn $30,000 and a friend loans you $5,000, and you spend $32,000, is that a surplus?
No because $2,000 of the money you spent was borrowed and needs to be paid back.
But in this case, the friend was also you.
The federal government gave the federal government 5,000 dollars, and got a 5,000 dollar voucher redeemable later for 5,000 dollars plus interest. The federal government then put that 5,000 dollars in the bank, where it could earn the interest it will later be paying back to the federal government. That is quite honestly the simplest I can explain this. I’ve left out some details, but in essence that’s what’s happening.
So, you’re having trouble with a concept a small child could understand?
You honestly think that everyone who understands this issue is lying to you? Don’t you think that sort of conspiracy thinking could lead you to all sorts of nonsense beliefs?
That’s certainly fair. And probably pretty close to reality.
But it is still debt, a general account obligation and has the same impact.
When the SS surplus disappears and turns into a significant deficit congress will have three choices, cut spending, raise taxes or borrow in the bond market. The third option is the most likely. Essentially intergovernmental debt will be converted to public debt.
Those who claim a surplus are the one who can’t understand.
I understand the issue. Gross federal debt increased ever fiscal year, the surplus did not exist.
Which reminds me of an earlier question. If you don’t support large balances in the Social Security Trust Fund, and you don’t support shrinking balances in the Social Security Trust Fund, why should we listen to your concerns about the health of the Social Security Trust Fund?
I didn’t say I supported or didn’t support either.
But the national debt is intergovernmental holdings + debt held by the public so if intergovernmental holdings like the Social Security Trust Fund increase more than debt held by the public decreased there is net increase in the national debt.
Borrowing is still borrowing no matter where it is from.
Can I take a crack at it?
You’re in junior high school. You have a paper route. You work hard at it, and at the end of the year, you’ve earned $1,000 from your paper route. You keep this money in your right pocket.
For Christmas your grandmother gives you $100. You put this money in your left pocket. You’re going to write grandma a thank you letter, and you want to remember how much came from her. It’s all your money, you just keep it in different pockets.
Over the course of the year, you also spent money. Some was for food, some was for movies, some was for school books, some was for new tires for your bike. When you add it all up, you’ve spent $1,040 dollars.
How do you keep it all straight? Your left pocket lends $40 to your right pocket. And you’re very scrupulous about record keeping. You draw up an IOU for $40 and put it in your left pocket. And in your right pocket you put a note saying that you owe the left pocket $40.
At the end of the year, you’ve got $60. Your left pocket has $100 ($60 in cash, and a promissory note worth 40), and your right pocket has -40 (the note representing the debt).
So, moonshot, how would you add this up? Do you call this a $40 deficit, or a $60 surplus?
You had to barrow $40 from your left pocket. That is a deficit.
But if the economy was booming and FICA receipts were adding hundreds of billions to the Trust Fund annually, you would be upset that the “left pocket” would be increasing the debt by hundreds of billions of dollars. That’s the very logical conclusion of what you’ve said, and I find it hard to believe you disagree with this.
And if the Trust Fund wasn’t growing, but instead being paid out because FICA receipts were insufficient to pay current benefits, I’m betting you’d be concern that the fund will go insolvent at some point. (But please correct me if I’m wrong.)
It seems to me that there is no way to have a trust fund for Social Security receipts that would satisfy you. Surpluses in Social Security are bad because it results in debt that you cannot acknowledge is offset by constitutionally-guaranteed assets. I’m guessing you think Social Security deficits are bad because that means the system is broke, or something like that.
So, what do you propose to do with Social Security that would allay your concerns about debt?
…
:rolleyes:
I was going to say there are no words. But, I suppose, I just used some.
moonshot925, you’ve earned a mention in this thread. Enjoy.
More money went into your pants than came out! How is that a deficit?
OK, earlier I challenged the conservatives to compare Federal Tax RECEIPTS vs federal spending and forget “debt”.
Here is the table – Statistics | Tax Policy Center
You will see that tax receipts were larger than federal spending in only four years since 1970.
Those four years were 1998, 1999, 2000, 2001.
Clinton wins.