# Standard & Poor downgrades US credit: now AA+ not AAA **URL:** \ **Category:** Great Debates\ **Created:** [August 6, 2011, 1:46am UTC](https://boards.straightdope.com/t/standard-poor-downgrades-us-credit-now-aa-not-aaa/591676 "2011-08-06T01:46:32Z")\ **Posts on this page:** 20\ **Page:** 3
**Author:** ![Whack-a-Mole](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/whack-a-mole/32/141_2.png) [@Whack-a-Mole](https://boards.straightdope.com/u/Whack-a-Mole)\ **Post date:** [August 6, 2011, 6:14am UTC](https://boards.straightdope.com/t/standard-poor-downgrades-us-credit-now-aa-not-aaa/591676/41 "2011-08-06T06:14:02Z")
> [@Omg\_a\_Black\_Conservative](#): > > Well, since Democrats/liberals tend to believe that the government should spend _more_ money, and that there are enough rich people to fund those government expenditures, I’d think it safe to say if anyone should be ignored, it should be them, on account of living in a fantasy world. The fantasy world is the one you are living in. I [provided you with CBO data](http://boards.straightdope.com/sdmb/showpost.php?p=14074805&postcount=450) that showed if the tax cuts are allowed to expire revenue and expenditures align pretty closely. You responded with some hocus-pocus about the AMT and 2035 but the page I cited clearly specifies (and sorry I did not respond in that thread…bolding below is mine): > [@](#): > > **The extended-baseline scenario adheres closely to current law, following CBO’s 10-year baseline budget projections through 2021** > and then extending the baseline concept for the rest of the long-term projection period. The alternative fiscal scenario incorporates > several changes to current law that are widely expected to occur or that would modify some provisions that might be difficult to > sustain for a long period. No mention of AMT out to 2035 in that bit. Note the alignment of the chart by 2015 (and running up to it before that). This is based on _current law_. I.E. If no one fiddles with anything, as things stand today, that is what will happen (the Bush tax cuts will expire on their own if no one does anything). ---
**Author:** ![Simplicio](https://avatars.discourse-cdn.com/v4/letter/s/c37758/32.png) [@Simplicio](https://boards.straightdope.com/u/Simplicio)\ **Post date:** [August 6, 2011, 6:15am UTC](https://boards.straightdope.com/t/standard-poor-downgrades-us-credit-now-aa-not-aaa/591676/42 "2011-08-06T06:15:01Z")
Thinking further, **Yorick** , I think your picturing the CBO as counting the SS fund as cash when they compute public debt. And thus double counting the money thats put into it. But thats not what they’re doing, the bonds in the fund aren’t counted as “income”, anymore then aircraft carriers or other things the gov’t buys are. The money raised by selling bonds to the fund is counted, but the bonds themselves aren’t, so the money only gets counted once. ---
**Author:** ![Simplicio](https://avatars.discourse-cdn.com/v4/letter/s/c37758/32.png) [@Simplicio](https://boards.straightdope.com/u/Simplicio)\ **Post date:** [August 6, 2011, 6:17am UTC](https://boards.straightdope.com/t/standard-poor-downgrades-us-credit-now-aa-not-aaa/591676/43 "2011-08-06T06:17:39Z")
> [@Omg\_a\_Black\_Conservative](#): > > You could cut defense spending to 0% and it still wouldn’t solve our debt. I’m okay with cutting defense, SS and Medicare spending by 50%. Are you? Medicare and SS have dedicated taxes that pay for them. If you cut the programs by 50%, I doubt people are going to accept paying those taxes at the previous rates. As a result, I’m pretty skeptical that cutting them would really do much to balance the budget. ---
**Author:** ![Carmady](https://avatars.discourse-cdn.com/v4/letter/c/f04885/32.png) [@Carmady](https://boards.straightdope.com/u/Carmady)\ **Post date:** [August 6, 2011, 6:19am UTC](https://boards.straightdope.com/t/standard-poor-downgrades-us-credit-now-aa-not-aaa/591676/44 "2011-08-06T06:19:27Z")
I could swear there was a thread a few years ago in which many of the board Republicans responded to criticism of Republicans cutting taxes for the richest Americans while simultaneously instigating enormous, crippling spending by saying that the debt didn’t matter. Now that their wariness of the debt has been kindled, we will no doubt be able to come to an agreement that both revenue increases from those most able to afford it (increased taxes, closed loopholes, etc) and spending cuts will be needed. And certainly we will agree that we can’t automatically put wars and corporate handouts off the table of things that could potentially be cut. Democrats will of course want to devote 40% of the budget to financing PBS, but I am confident that they realize the situation is too grim for that to pass. With the brain power of both parties working on this, I predict a resounding success. ---
**Author:** ![Shayna](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/shayna/32/17976_2.png) [@Shayna](https://boards.straightdope.com/u/Shayna)\ **Post date:** [August 6, 2011, 6:22am UTC](https://boards.straightdope.com/t/standard-poor-downgrades-us-credit-now-aa-not-aaa/591676/45 "2011-08-06T06:22:07Z")
This notion that debt is necessarily a bad thing is utterly absurd. _Especially_ when there is high unemployment in the nation. The interest rate on U.S. debt is so low that $1 trillion incurs only $25 billion in interest per year. Borrow $1 trillion and start roads projects and bridge projects and any number of other things the government is actually _responsible_ for doing, and at the end of the year you’ve spent $1,025,000,000,000.00. The Republican way, we take that $1 trillion and pay it to our creditors. Now we don’t owe $25 billion in interest for the year. YAY - Savings! Uhm, no. Now you have 10 million people unemployed who are collecting federal unemployment. Over the course of that same year, no jobs are created, no roads are repaired, no bridges are reinforced, basically nothing gets done. And the cost of 10 million unemployed to the nation is $250 billion. So now, instead of putting 10 million people to work (and by the way, collecting taxes on that income, which isn’t even figured into this little equation), and spending only $25 billion for interest payments, we have a crumbling infrastructure for the low low price of $1,250,000,000,000.00, or _10 times_ what carrying that $1 trillion in debt would have been. We’re fucked because Republicans can’t do math and don’t understand the first thing about macroeconomics. We’re being led around by the nose by a bunch of retards. > [@Robert Frank](#): > > We’ve known for over 60 years that in a situation that we’re in now where there is persistent shortfall of demand, government can invest in public works projects and other things that will get the economy back on its feet. It could be done. > > It’s quite easy to do. The workers are there who know how to do the jobs. The market’s happy to lend us the money. As Ezra said, they’re eager to loan us more money at very low interest rates. The cost of debt compared to the cost of unemployment is incredibly low. A trillion dollar deficit costs us $25 billion a year to pay the interest on that. If we have an extra ten million people unemployed that’s $250 billion lost forever each year, so it’s a 10 to 1 tradeoff. We’re focusing on deficit reduction when we really ought to be focused on job creation, and we know how to do it. > > **Focusing on the deficit, cutting spending that’s going to make the deficit bigger. What we’re doing now is just unimaginably stupid.** > > [http://www.msnbc.msn.com/id/26315908//vp/44028185#44028185](http://www.msnbc.msn.com/id/26315908//vp/44028185#44028185) It stuns me that after 30 years of empirical data, Republicans flat out refuse to see that supply-side economics is a steaming pile of crap. It was an intentional _lie_ created by one man, Jude Wanniski. Wanniski was the Grover Norquist of the '70s. Nobody ever elected him to anything – he was a _journalist_ for g-d’s sake. But he wielded great power and control within the Republican party. He invented the “supply-side economics” terminology as **nothing more than a craven way to get Republicans to win elections, by turning them into “the second Santa Claus”**. [The Two Santa Claus Theory](http://en.wikipedia.org/wiki/Jude_Wanniski#The_Two_Santa_Claus_Theory) > [@](#): > > By 1974, Jude Wanniski had had enough. The Democrats got to play Santa Claus when they passed out Social Security and Unemployment checks – both programs of the New Deal – as well as when their “big government” projects like roads, bridges, and highways were built giving a healthy union paycheck to construction workers. They kept raising taxes on businesses and rich people to pay for things, which didn’t seem to have much effect at all on working people (wages were steadily going up, in fact), and that made them seem like a party of Robin Hoods, taking from the rich to fund programs for the poor and the working class. Americans loved it. And every time Republicans railed against these programs, they lost elections. > > Everybody understood at the time that economies are driven by demand. People with good jobs have money in their pockets, and want to use it to buy things. The job of the business community is to either determine or drive that demand to their particular goods, and when they’re successful at meeting the demand then factories get built, more people become employed to make more products, and those newly-employed people have a paycheck that further increases demand. > > Wanniski decided to turn the classical world of economics – which had operated on this simple demand-driven equation for seven thousand years – on its head. In 1974 he invented a new phrase – “supply side economics” – and suggested that the reason economies grew wasn’t because people had money and wanted to buy things with it but, instead, because things were available for sale, thus tantalizing people to part with their money. The more things there were, the faster the economy would grow. > > [Two Santa Clauses or How The Republican Party Has Conned America for Thirty Years](http://www.commondreams.org/view/2009/01/26-0) Just once, I would like a Republican on this forum (or anywhere for that matter), to **acknowledge that this theory has been _tried_ and has _failed_ – repeatedly.** Look at the facts, the cold, hard facts of how “politicized” that entire crap, _made-up_ theory of “supply-side” economics actually is. And admit the truth. ---
**Author:** ![Ravenman](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ravenman/32/2929_2.png) [@Ravenman](https://boards.straightdope.com/u/Ravenman)\ **Post date:** [August 6, 2011, 6:24am UTC](https://boards.straightdope.com/t/standard-poor-downgrades-us-credit-now-aa-not-aaa/591676/46 "2011-08-06T06:24:01Z")
> [@yorick73](#): > > You are missing my point. The money in the SS fund was spent. The public debt was paid down by borrowing more money from the SS fund in the form of intragovernmental debt. Does this REALLY have to be explained again? The money from the trust fund was not spent. No money was borrowed from the trust fund. The trust fund continued to grow, because the SS surpluses were invested in the safest investment in the world (at that time). The government bonds were “deposited” in the trust fund. There was no money taken from the trust fund. It kept getting bigger. The money the government raised by selling the bonds was used for other things. You cannot claim that Social Security funds are being diverted to other purposes, because the value of the trust fund continues to grow. It’s a simple fact. ---
**Author:** ![Omg\_a\_Black\_Conservative](https://avatars.discourse-cdn.com/v4/letter/o/7ba0ec/32.png) [@Omg\_a\_Black\_Conservative](https://boards.straightdope.com/u/Omg_a_Black_Conservative)\ **Post date:** [August 6, 2011, 6:24am UTC](https://boards.straightdope.com/t/standard-poor-downgrades-us-credit-now-aa-not-aaa/591676/47 "2011-08-06T06:24:52Z")
> [@Whack-a-Mole](#): > > The fantasy world is the one you are living in. > > I [provided you with CBO data](http://boards.straightdope.com/sdmb/showpost.php?p=14074805&postcount=450) that showed if the tax cuts are allowed to expire revenue and expenditures align pretty closely. > > You responded with some hocus-pocus about the AMT and 2035 but the page I cited clearly specifies (and sorry I did not respond in that thread…bolding below is mine): > > No mention of AMT out to 2035 in that bit. Note the alignment of the chart by 2015 (and running up to it before that). > > This is based on _current law_. I.E. If no one fiddles with anything, as things stand today, that is what will happen (the Bush tax cuts will expire on their own if no one does anything). Unlike you, who didn’t even read what you provided me, I quoted for you what was in the report **verbatim**. That wasn’t some ‘hocus-pocus’; that was a simple copy and paste. Just because you don’t like what the report says, doesn’t mean you can dismiss it-- especially since you, initially, brought it up. Just because you skipped over pages 3 and 60, doesn’t mean they don’t exist. Edit: The baseline scenario assumes the Bust Tax Cuts end. > [@](#): > > One long-term budget scenario used in this analysis, the extended-baseline scenario, adheres closely to current law. Under this scenario, the expiration of the tax cuts enacted since 2001 and most recently extended in 2010, the growing reach of the alternative minimum tax, the tax provisions of the recent health care legislation, and the way in which the tax system interacts with economic growth would result in steadily higher revenues relative to GDP. ---
**Author:** ![yorick73](https://avatars.discourse-cdn.com/v4/letter/y/b5a626/32.png) [@yorick73](https://boards.straightdope.com/u/yorick73)\ **Post date:** [August 6, 2011, 6:25am UTC](https://boards.straightdope.com/t/standard-poor-downgrades-us-credit-now-aa-not-aaa/591676/48 "2011-08-06T06:25:55Z")
> [@Simplicio](#): > > To expand on this with made up numbers, the gov’t made 50 dollars from income tax and 50 dollars from SS payroll taxes, and then the general fund spent 55 dollars while SS spent 40. The General fund borrows five from the SS fund to cover its expenses, and so intragovermental debt is increased by 5. > > But thats just passing money from one pocket to another, at the end of the day, the gov’t still made five dollars more then it spent. Parts of it owe other parts money, but its still running a total surplus. > > ETA: > See above. We borrowed it from ourselves. The total financial situation of the gov’t improved, and we ran surpluses by any reasonable definition. I’m not sure what your reasonable definition is. Intragovernmental debt is not a wash simply because we owe money to ourselves. That money is owed to current and future trust fund recipients just like regular debt is owed to someone at a later date. The simple fact is that national debt increased during every year Clinton was in office. Why would we need to borrow money if we are running a surplus? ---
**Author:** ![Simplicio](https://avatars.discourse-cdn.com/v4/letter/s/c37758/32.png) [@Simplicio](https://boards.straightdope.com/u/Simplicio)\ **Post date:** [August 6, 2011, 6:28am UTC](https://boards.straightdope.com/t/standard-poor-downgrades-us-credit-now-aa-not-aaa/591676/49 "2011-08-06T06:28:36Z")
> [@yorick73](#): > > I’m not sure what your reasonable definition is. Intragovernmental debt is not a wash simply because we owe money to ourselves. That money is owed to current and future trust fund recipients just like regular debt is owed to someone at a later date. > > The simple fact is that national debt increased during every year Clinton was in office. Why would we need to borrow money if we are running a surplus? I’m not sure I can explain it any better then I did in post #39. Maybe you can tell me if something from that post doesn’t make sense and I’ll try and clarify? ---
**Author:** ![yorick73](https://avatars.discourse-cdn.com/v4/letter/y/b5a626/32.png) [@yorick73](https://boards.straightdope.com/u/yorick73)\ **Post date:** [August 6, 2011, 6:30am UTC](https://boards.straightdope.com/t/standard-poor-downgrades-us-credit-now-aa-not-aaa/591676/50 "2011-08-06T06:30:51Z")
> [@Ravenman](#): > > Does this REALLY have to be explained again? > > The money from the trust fund was not spent. No money was borrowed from the trust fund. The trust fund continued to grow, because the SS surpluses were invested in the safest investment in the world (at that time). > > The government bonds were “deposited” in the trust fund. There was no money taken from the trust fund. It kept getting bigger. > > The money the government raised by selling the bonds was used for other things. You cannot claim that Social Security funds are being diverted to other purposes, because the value of the trust fund continues to grow. It’s a simple fact. Yes, I think it does need to be explained. Government bonds are debt. The SS fund is flush with IOUs from the federal government. The SS trust fund is required by law to buy bonds with any excess revenue. Where does that money go? Into the general fund. ---
**Author:** ![yorick73](https://avatars.discourse-cdn.com/v4/letter/y/b5a626/32.png) [@yorick73](https://boards.straightdope.com/u/yorick73)\ **Post date:** [August 6, 2011, 6:33am UTC](https://boards.straightdope.com/t/standard-poor-downgrades-us-credit-now-aa-not-aaa/591676/51 "2011-08-06T06:33:22Z")
> [@Simplicio](#): > > I’m not sure I can explain it any better then I did in post #39. Maybe you can tell me if something from that post doesn’t make sense and I’ll try and clarify? You didn’t explain it in post #39. We can argue all day about intragovernmental holdings and public debt. The bottom line is total national debt which takes both into account. That number increased every year. ---
**Author:** ![Simplicio](https://avatars.discourse-cdn.com/v4/letter/s/c37758/32.png) [@Simplicio](https://boards.straightdope.com/u/Simplicio)\ **Post date:** [August 6, 2011, 6:35am UTC](https://boards.straightdope.com/t/standard-poor-downgrades-us-credit-now-aa-not-aaa/591676/52 "2011-08-06T06:35:42Z")
> [@yorick73](#): > > You didn’t explain it in post #39. We can argue all day about intragovernmental holdings and public debt. The bottom line is total national debt which takes both into account. That number increased every year. But we agree total gov’t revenue was greater then total gov’t expenditures, right? From my example in that post, the gov’t still took in 5 more dollars then it spent. Again, I don’t think you can reasonably say there wasn’t a surplus then, regardless of the state of the gov’ts internal book-keeping. ---
**Author:** ![Omg\_a\_Black\_Conservative](https://avatars.discourse-cdn.com/v4/letter/o/7ba0ec/32.png) [@Omg\_a\_Black\_Conservative](https://boards.straightdope.com/u/Omg_a_Black_Conservative)\ **Post date:** [August 6, 2011, 6:35am UTC](https://boards.straightdope.com/t/standard-poor-downgrades-us-credit-now-aa-not-aaa/591676/53 "2011-08-06T06:35:44Z")
> [@Simplicio](#): > > Medicare and SS have dedicated taxes that pay for them. If you cut the programs by 50%, I doubt people are going to accept paying those taxes at the previous rates. As a result, I’m pretty skeptical that cutting them would really do much to balance the budget. If they aren’t already, I’m fairly sure that SS and Medicare pay out more than they receive or will be soon in the next 10 - 15 years. Therefore, limiting the amount paid out by SS and Medicare would balance the budget (or capping the amount on can receive). Sure, people wouldn’t be happy about it, but it’s necessary. > [@Shayna](#): > > This notion that debt is necessarily a bad thing is utterly absurd. _Especially_ when there is high unemployment in the nation. > > The interest rate on U.S. debt is so low that $1 trillion incurs only $25 billion in interest per year. Borrow $1 trillion and start roads projects and bridge projects and any number of other things the government is actually _responsible_ for doing, and at the end of the year you’ve spent $1,025,000,000,000.00. > > The Republican way, we take that $1 trillion and pay it to our creditors. Now we don’t owe $25 billion in interest for the year. YAY - Savings! > > Uhm, no. > > Now you have 10 million people unemployed who are collecting federal unemployment. Over the course of that same year, no jobs are created, no roads are repaired, no bridges are reinforced, basically nothing gets done. And the cost of 10 million unemployed to the nation is $250 billion. > > So now, instead of putting 10 million people to work (and by the way, collecting taxes on that income, which isn’t even figured into this little equation), and spending only $25 billion for interest payments, we have a crumbling infrastructure for the low low price of $1,250,000,000,000.00, or _10 times_ what carrying that $1 trillion in debt would have been. Japan and its ‘Lost Decade’ says hello. ---
**Author:** ![yorick73](https://avatars.discourse-cdn.com/v4/letter/y/b5a626/32.png) [@yorick73](https://boards.straightdope.com/u/yorick73)\ **Post date:** [August 6, 2011, 6:39am UTC](https://boards.straightdope.com/t/standard-poor-downgrades-us-credit-now-aa-not-aaa/591676/54 "2011-08-06T06:39:28Z")
> [@Simplicio](#): > > But we agree total gov’t revenue was greater then total gov’t expenditures, right? From my example in that post, the gov’t still took in 5 more dollars then it spent. Again, I don’t think you can reasonably say there wasn’t a surplus then, regardless of the state of the gov’ts internal book-keeping. No, total revenue was less that total expenditures as should be clear from the fact that total national debt increased. You are getting bogged down in the internal bookkeeping which shows that public debt, which is only one part of total debt, decreased. ---
**Author:** ![Whack-a-Mole](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/whack-a-mole/32/141_2.png) [@Whack-a-Mole](https://boards.straightdope.com/u/Whack-a-Mole)\ **Post date:** [August 6, 2011, 6:42am UTC](https://boards.straightdope.com/t/standard-poor-downgrades-us-credit-now-aa-not-aaa/591676/55 "2011-08-06T06:42:58Z")
> [@Omg\_a\_Black\_Conservative](#): > > Unlike you, who didn’t even read what you provided me, I quoted for you what was in the report **verbatim**. That wasn’t some ‘hocus-pocus’; that was a simple copy and paste. Just because you don’t like what the report says, doesn’t mean you can dismiss it-- especially since you, initially, brought it up. Just because you skipped over pages 3 and 60, doesn’t mean they don’t exist. > > Edit: The baseline scenario assumes the Bust Tax Cuts end. I quoted verbatim too. Current law, as it stands, will align revenue and spending pretty closely. Do you disagree with the CBO on that? ---
**Author:** ![Simplicio](https://avatars.discourse-cdn.com/v4/letter/s/c37758/32.png) [@Simplicio](https://boards.straightdope.com/u/Simplicio)\ **Post date:** [August 6, 2011, 6:43am UTC](https://boards.straightdope.com/t/standard-poor-downgrades-us-credit-now-aa-not-aaa/591676/56 "2011-08-06T06:43:52Z")
> [@yorick73](#): > > No, total revenue was less that total expenditures as should be clear from the fact that total national debt increased. You are getting bogged down in the internal bookkeeping which shows that public debt, which is only one part of total debt, decreased. In my example in post #39, total debt increased by zero dollars, while revenues exceeded expenditures by 5$. In that case, are you denying there was a surplus? ---
**Author:** ![Little\_Nemo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/little_nemo/32/3120_2.png) [@Little\_Nemo](https://boards.straightdope.com/u/Little_Nemo)\ **Post date:** [August 6, 2011, 6:52am UTC](https://boards.straightdope.com/t/standard-poor-downgrades-us-credit-now-aa-not-aaa/591676/57 "2011-08-06T06:52:14Z")
> [@LonesomePolecat](#): > > Sorry, Der. The idea that Republicans and conservatives are entirely responsible for our debt crisis just won’t fly. Republicans and conservatives are entirely responsible for the debt crisis. They’re only about ninety percent responsible. Here’s the [Presidents](http://en.wikipedia.org/wiki/File:US_Federal_Debt_as_Percent_of_GDP_by_President.png) who increased the national debt as a percentage of the GDP: Ford, Reagan, Bush, Bush, and Obama. Here’s a list of Presidents who lowered the national debt as a percentage of the GDP: Truman, Eisenhower, Kennedy, Johnson, Nixon, Carter, Clinton. As you pointed out, Democrats would prefer not to cut government spending. But they’ve offered to do so. Republicans would prefer not to raise government revenue. They refuse to consider it. As far as government spending, the biggest percentage increases in the federal budget occurred during Reagan’s and Bush’s administrations. ---
**Author:** ![Omg\_a\_Black\_Conservative](https://avatars.discourse-cdn.com/v4/letter/o/7ba0ec/32.png) [@Omg\_a\_Black\_Conservative](https://boards.straightdope.com/u/Omg_a_Black_Conservative)\ **Post date:** [August 6, 2011, 6:52am UTC](https://boards.straightdope.com/t/standard-poor-downgrades-us-credit-now-aa-not-aaa/591676/58 "2011-08-06T06:52:24Z")
> [@Whack-a-Mole](#): > > I quoted verbatim too. > > Current law, as it stands, will align revenue and spending pretty closely. > > Do you disagree with the CBO on that? Current law-- if everything is left alone-- will align revenue and spending pretty closely in part by extending the AMT to affect 50% of households (something you’ve yet to acknowledge). Just how well do you think subjecting an extra 47% of households in the U.S. to the AMT will go over with Democrats and their base, who adamantly scream about how only the rich should be taxed and decry tax increases on the middle class? It’s funny how that works. People don’t want to cut the entitle programs, but they don’t want to pay tax increases for them, either. ---
**Author:** ![Simplicio](https://avatars.discourse-cdn.com/v4/letter/s/c37758/32.png) [@Simplicio](https://boards.straightdope.com/u/Simplicio)\ **Post date:** [August 6, 2011, 7:14am UTC](https://boards.straightdope.com/t/standard-poor-downgrades-us-credit-now-aa-not-aaa/591676/59 "2011-08-06T07:14:11Z")
> [@Simplicio](#): > > In my example in post #39, total debt increased by zero dollars, while revenues exceeded expenditures by 5$. In that case, are you denying there was a surplus? Here’s a more accurate example, with (very) approximate real numbers. In 2000, the US gov’t got 1.4 trillion in income tax and 600 billion in SS tax for a total revenue of 2 trillion. Total SS spending that year was 400 billion, while the general fund spending was about 1.5 trillion. So the gov’t took in about an extra 100 billion dollars. Hooray! So the general fund decided to pay down 100 billion dollars worth of debt. But first it has to get money to cover its own deficit, plus its mandated by law to buy off the entire SS surplus anyways. So it sells SS 200 billion in bonds, and uses the 100 billion left over after its own expenditures to pay down the pre-existing debt from previous years. So the intra-govermental debt goes up by 200 billion dollars, but the debt to the public goes down by 100 billion. By **Yoricks** accounting, then, we’ve increased the debt by 100 billion dollars, but in reality, the gov’t took in 100 billion dollars more then it spent, and now owes that much less then it did the previous year. By pretty much any definition then, there was a surplus. ---
**Author:** ![Whack-a-Mole](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/whack-a-mole/32/141_2.png) [@Whack-a-Mole](https://boards.straightdope.com/u/Whack-a-Mole)\ **Post date:** [August 6, 2011, 7:32am UTC](https://boards.straightdope.com/t/standard-poor-downgrades-us-credit-now-aa-not-aaa/591676/60 "2011-08-06T07:32:27Z")
> [@Omg\_a\_Black\_Conservative](#): > > Current law-- if everything is left alone-- will align revenue and spending pretty closely in part by extending the AMT to affect 50% of households (something you’ve yet to acknowledge). Just how well do you think subjecting an extra 47% of households in the U.S. to the AMT will go over with Democrats and their base, who adamantly scream about how only the rich should be taxed and decry tax increases on the middle class? > > It’s funny how that works. People don’t want to cut the entitle programs, but they don’t want to pay tax increases for them, either. AMT could be easily modified to exclude people below a certain income if they wanted to. Yes that would pull the alignment of revenue and expenditures out of line but then that graph was not made with current budget cuts which just happened in mind. I doubt exempting people of moderate means from the AMT would have a dramatic impact anyway on that graph. And please list the “entitle” programs you think should be reduced or cut entirely. [Previous page](https://boards.straightdope.com/t/standard-poor-downgrades-us-credit-now-aa-not-aaa/591676.md?page=2) [Next page](https://boards.straightdope.com/t/standard-poor-downgrades-us-credit-now-aa-not-aaa/591676.md?page=4)