Tuesday, April 26, 2011


While I don't often do this, I posted "Ten Myths About Our Budget Mess (and Why the GOP Isn't Serious About Solving It)" onto my Facebook account. I have a high school friend who took exception to the claim that President Clinton produced budget surpluses. He even argued that budget surpluses never existed.

But they did, as these Congressional Budget Office charts make abundantly clear ...

So, how exactly did my friend come to believe that budget surpluses under President Clinton weren't real? Two reasons.

First, he watches Fox News. I can't do anything here.

Second, if we dig a little deeper, we find that my friend - like many of our Fox viewing friends - ignored the difference between national debt and annual receipts (or revenues). Confusing debt with revenue should not occur. Here's what happened.

First, (apart from watching Fox News) my friend posted these debt numbers which show that our total debt load never went down from year to year under President Clinton ...

Ending National Debt Deficit

FY1993 09/30/1993 $4.411488 trillion
FY1994 09/30/1994 $4.692749 trillion ... $281.26 billion
FY1995 09/29/1995 $4.973982 trillion ... $281.23 billion
FY1996 09/30/1996 $5.224810 trillion ... $250.83 billion
FY1997 09/30/1997 $5.413146 trillion ... $188.34 billion
FY1998 09/30/1998 $5.526193 trillion ... $113.05 billion
FY1999 09/30/1999 $5.656270 trillion ... $130.08 billion
FY2000 09/29/2000 $5.674178 trillion ... $17.91 billion
FY2001 09/28/2001 $5.807463 trillion ... $133.29 billion

What my friend is focusing on here is our TOTAL DEBT LOAD (which you can access here).

Then he directs our attention to a second set of numbers, which show how much our national debt climbed annually - even during the Clinton surplus years. The numbers presented make it look like we didn't put a dent into the total budget deficit. Ergo, for our conservative friends, there was never a surplus.

And the (fake) Fox News crowd goes wild.

Next, my friend ignores that there is a difference between total debt and actual annual revenue.

What does this mean, you ask?

Think about it this way. If you have a home mortgage, credit card debt, and other expenses that keep piling up this is your total debt load (our national debt). If you don't pay the principal down, or if you don't earn enough during the year to pay the total interest on your debt load, your TOTAL DEBT (or, our national debt) will not come down. It will increase.

However - and this is the key point - this doesn't mean that you didn't earn more money during the year. It just means that your total debt load climbed.

Allow me to elaborate ...

In your household you can earn more money by taking a second job, getting a raise, or being rewarded a bonus. If your raise, or your new job, or your bonus don't earn you enough to pay down your debt loads and/or doesn't earn you enough to cover the interest payments your TOTAL DEBT LOAD will still climb ... even if your annual income also grows.
So, for example, you could get a raise or a second job, and watch your yearly income increase. But if you're buried under a ton of debt to begin with you're not going to be able to pay down the principal or the interest on your debt (it's actually a little more complex than this, but ...).
My friend ignores these dynamics, as do the people at Fox News.

If you ignore the distinction between annual revenue (tax receipts) and total obligations (national debt) you will not be able to acknowledge that revenue increases one year doesn't necessarily mean your total debt will go down. Revenue surpluses will not put a dent into your debt load if you're buried up to your eyeballs in debt (or spend more, as Bush did).

This is what happened to the Clinton surpluses. They got sucked up by the Reagan-Bush I tidal wave of debt, and completely disappeared under Bush II's financial tsunami of unfunded tax cuts, unfunded Medicare D, unfunded war policies, and market collapse.

If you run your household budget you probably understand this debt-revenue contrast.

At the end of the day Democrats have demonstrated over and over again that tax-and-spend is more responsible than borrow-and-spend. Put more bluntly, Democrats have proven over time that they are better stewards of our money than the GOP.

And, yes, Clinton's surpluses were real.

- Mark


Jeff said...

Here is another perspective on this

Jeff said...

Hi Mark,

Also, was it Clinton or the Republican Congress who got our fiscal house in order. I remember Congress shutting down the government to get Clinton on board with Welfare reform etc. Funny, years later, Clinton touts Welfare reform as one of his greatest accomplishments. Will Obama take credit for spending more than all other presidents combined? Time will tell!

cb&qer said...

Remind me never to let you do my home budget. Just as you can conceal your growing personal debt load by shifting accounts around, so can the government, and that's precisely what it did under Clinton. The surpluses were imaginary: the money either paid down the debt (which it didn't) or it was spent. Enough with the smoke and mirrors. The problem is, Dems want to do both: tax and spend and borrow and spend.