Then you better raise a LOT of taxes, including on the middle class. “Tax the rich” is a great sound bite, but it’s not going to do squat for our debt problem. John Mace provided this cite in a different thread:
20% of *the year’s *deficit, that is. Not the total debt.
President Clinton is not the one who started the accounting fraud that the government uses, it was actually President Johnson.
During the 1960’s the federal government began to run large operating budget deficits (Vietnam War, Great Society and Space Race).
But Social Security was running large surpluses starting in 1966.
In 1967 President Johnson appointed a Commission on Federal Budget Concepts which in its October 1967 report proposed a unified budget to do this. Trust funds would be lumped together with general government operations. It was argued that this would make the budget simpler and easier to understand. Johnson submitted the first unified budget to Congress for Fiscal Year 1969 scheduled to begin on July 1, 1968.
Johnson claimed he had a $3.242 billion surplus in FY 1969 when in reality there was a $6.142 billion deficit.
False.
The debt WAS reduced.
The problem is that the “national debt” consists of “debt held by the public” which represents money the government actually borrows, and “intragovernmental holdings” which is money one part of the government owes another part (for instance, the SS Trust Fund’s cash going to pay for discretionary spending).
Debt held by the public is the real debt. It goes down whenever there is a surplus - as it did during the latter Clinton years. It can go down even when intragovernmental holdings, and therefore the national debt, goes up.
A surplus/deficit is defined by how much money the government takes in vs. how much it spends in a given year. Period. And in Clinton’s final years, the government took in more than it spent. That is a fact, and there is no need to look at any other numbers.
Looking at debt figures simply demonstrates that the government’s debt figures are confusing.
Even if you think that represents a fraud, some (I think two) of Clinton’s surpluses did not involve SS. He had a surplus even if you only count discretionary spending and regular taxes.
So that’s an irrelevant point.
A legitimate debate.
But none of it changes the fact that there were surpluses in Clintons’ final years.
The government took in more than it spent in those years. That’s a surplus.
In some of those years, the government took in more than it spent in both SS and non-SS accounts (there were surpluses in both, in other words).
Which it did.
This is a misrepresentation of what the Trust Fund is.
SS always “draws down” the TF. The TF is not a savings account that is stashing money for later. It’s simply an account. It takes in money, and it spends it. It’s merely a way of dedicating payroll taxes to SS.
It has developed a surplus in past years, and it is now drawing on that surplus (now, not in a decade), which simply means that benefits are now partly paid for from other taxes (to pay back money the rest of the government accounts borrowed from it) as well as payroll taxes.
This is a fairly good analogy. Not perfect, but good.
The important part is this - no matter what you consider that extra cash to be - debt, whatever - it doesn’t change the fact that you made $100 and only spent $90 that week. You had a surplus for the week. That is undeniable, and that is what happened during the latter Clinton years.
No, he had a surplus in all those years (4?). In 1 or 2, he had a surplus in both the SS Trust Fund account and in the others.
I have already explained this.
The Social Security trust funds are not the only trust funds.
There are other trust funds:
Federal hospital insurance trust fund, Federal supplementary medical insurance trust fund, Unemployment trust fund, Airport and airway trust fund, Highway trust fund, Military retirement fund, Civil service retirement and disability fund, Railroad Retirement Board, etc…
Before 1968 the government was honest and trust funds were excluded from general government operations.
But that changed with Johnson and his unified budget which has been used since 1968.
If all trust funds are excluded (not just Social Security) Clinton had a deficit every year.
Assuming that’s true (did you post numbers? sorry if I missed them) there’s a reason we don’t just exclude all these trust funds. It’s not as simple as you make it.
Some functions of government are funded with dedicated taxes. But the spending on them is mixed. Often the general fund is used to subsidize spending on some of these functions, for instance, transportation. To divide every little dedicated tax and every little government expense in one year and declare that each must have a surplus or none of them do is not useful accounting. The government may choose to divert dedicated taxes to other needs whenever it wants to - there’s nothing special about, for instance, the gas tax vs. income tax. It’s just revenue. The government slapped a few cents on the gas tax for general revenue during Clinton’s term, in fact. That didn’t change the big picture of spending - it only mattered to three groups - road contractors, AAA, and Republicans who wanted to bash new taxes.
A surplus means you spent less than you earned in a year. You’ve made a good case that this is more complicated than simply saying “surplus,” but it doesn’t turn a surplus into a deficit.
I might have missed something in all of this. Can someone clarify/verify:
What I think I got from this is that social security income (FICA) and expenses (benefits paid) are off budget (not counted for annual deficit numbers). However, since SS can’t just hold cash, any excess has to be invested in treasury bonds (and the treasury has to sell them to SS even if there is no need to borrow for on budget items). Does that mean that all of the SS trust fund (that some politicans say has been raided) is fully documented as treasury bonds and part of the government debt?
As part of the “national debt,” yes. Which is not the same thing as money the government borrows from outside sources, which is “debt held by the public.”
So it is possible to have a surplus and see the “national debt” going up.
Let me try to use simpler numbers to show your mistake.
Suppose the government’s income was 200 and its expenses were 195. So it’s surplus is 5.
Now suppose the general fund collected 95 and paid out 100 and Social Security collected 105 and paid out 95. So the general fund had a -5 deficit and SS was +10. 10-5=5, so so far everything adds up.
What you’re arguing is that if SS sends its surplus to the general fund, that creates an extra -10 that has to be accounted for. So you subtract this new liability and turn a +5 surplus into a -5 deficit.
But we know there’s a surplus overall, so how do we get a deficit by breaking it into pieces?
The answer is that if you’re going to debit the Treasury for taking the loan, you’ve got to credit the trust fund for having made it.
Let’s pretend for a moment that the trust fund is China, as you suggested.
China has a surplus of 10, which it lends to America. America has a deficit of 10, which it borrows from China. Now how do you account for that?
Do you say that China has no surplus, because it lent the surplus to America? If so, what about the bonds China got in return? Is their value 0? And if it is 0, how can you say that America has a debt to China, when you’ve just claimed that the value of the debt is 0?
That’s what you’re doing when you subtract the value of the intragovernment loans from the overall budget. You’re saying they’re a real debit against the borrower, but not a real credit to the lender.
You have to pick one. I don’t care how you do it, but you have to be consistent.
It’s more like:
I have two jobs. During the day I’m a doctor, and at night I’m a stripper. I have a rule that says I spend the doctor money on food and the stripper money on clothing. One day I have $50 from doctoring and $50 from stripping. BUT I want to spend $55 on food and $40 on clothing. What do I do? I’ve got a surplus in my clothing pocket and a deficit in my food pocket. How do I resolve the situation?
Suppose I take $10 from my clothing pocket and replace it with an IOU for $10. Then I take the $10 and put it in my food pocket.
Some people think because I’ve got an IOU in one of my pockets that I’ve transformed the overall budget from a surplus to a deficit. In fact moving the money from one pocket to another changes nothing. I still have a $5 surplus.
Exactly.
It’s still true that you “owe” money, to yourself - actually, to your future need for clothing.
In the real world, that’s old people who will expect the government to spend money on their Social Security.
That’s a legitimate concern. It’s like borrowing against your retirement to pay today’s bills. It’s a problem, perhaps a big one, since there are going to be more old people and fewer young workers some day.
But, as you note, it’s still a surplus.
And more important - in at least one year under Clinton as I recall, maybe two, the surplus was within discretionary accounts and didn’t rely on SS taxes. Back to the analogy - both jobs earned their $50 that night, and you spent less than $50 on clothes and less than $50 on food.
If you keep doing that, your clothes pocket will have mori in IOUs than there is income to your food pocket.
Is there an analogous problem that needs solving w.r.t. the national budget and social security?
Of course. Nobody’s saying it’s a good way to run things.
Though we can adjust the food or clothing budgets if we need to. For example, Congress has already increased the retirement age to mitigate the SS situation. It could do more.
“Clinton’s large budget surpluses also owe much to the Social Security tax on payrolls. Social Security taxes now bring in more than the cost of current benefits, and the “Social Security surplus” makes the total deficit or surplus figures look better than they would if Social Security wasn’t counted. But even if we remove Social Security from the equation, there was a surplus of $1.9 billion in fiscal 1999 and $86.4 billion in fiscal 2000. So any way you count it, the federal budget was balanced and the deficit was erased, if only for a while.”
I have found figures for federal funds surpluses/deficits. Federal funds are all funds except for trust funds. These are the figures that should be used because they most accurately show the surplus/deficit in the general operating budget.
Federal Funds Surplus or Deficit(–) in millions of dollars:
FY 1994 = –298,571
FY 1995 = –263,231
FY 1996 = –222,091
FY 1997 = –147,897
FY 1998 = –91,981
FY 1999 = –87,164
FY 2000 = 1,836
FY 2001 = –101,422
As you can see, Clinton had 7 deficits and a tiny surplus in FY 2000.