"America’s finances were in great shape by the year 2000."

"(In the 1990s) We went from deficit to surplus. America was actually on track to becoming completely debt-free, and we were prepared for the retirement of the Baby Boomers.

But after Democrats and Republicans committed to fiscal discipline during the 1990s, we lost our way in the decade that followed. We increased spending dramatically for two wars and an expensive prescription drug program – but we didn’t pay for any of this new spending. Instead, we made the problem worse with trillions of dollars in unpaid-for tax cuts – tax cuts that went to every millionaire and billionaire in the country; tax cuts that will force us to borrow an average of $500 billion every year over the next decade."


An important reminder that the U.S. was on solid ground fiscally when Bill Clinton left office, and then kablooey!

There has not been a single year in recent history when our national debt decreased. We got close under Clinton but we never had an actual surplus. And while our financial condition has gotten worse, there is no way that a nation trillions in debt can be fairly described as having finances that are in "great shape".

We were in great shape after WW2, when we were the worlds biggest creditor nation. By the 1990s we were already the biggest debtor.

Clinton (and Congress) had the train on the tracks headed in the right direction like it had not been since probably the 70s. And then came Bush and Cheney...

And since there never was a surplus, you will find it impossible to find a recent year when the national debt went down.

People point to the wars as one of the reasons for the exploding debt, and they are right. But Medicare Part D is even worse than the wars, fiscally, as it is a permanent entitlement and contains no reasonable limits on pharma price-gouging.

Force a repeal of Medicare Part D, and it's checkmate against the GOP. They can either line up behind an entitlement program or reject the signature domestic "achievement" of their last President.

You apparently read the quote in the title and went off on your tangent about the debt. If you had actually read the OP you'd know it was about fiscal displine in the 1990s that was gradually getting the fiscal house in order so that the debt COULD be retired over the next decade or so.

Try reading next time.

did you even read my response?

Pretending that we were in "great shape" at any time in the past few decades flies in the face of the definition of the word "great". Being in massive debt is not being in "great shape" no matter how you slice it.

I suspect you are young enough to not remember what a relief it was to slowly climb out of the hole during the Clinton administration after Reagan and Bush drove it into the ground. To someone with relatively little experience I suppose anything short of knocking down your first billion just ain't too "great."

And the rest of what follows is wrong. I am old enough to have voted for Dukakis. I suspect, from your statement, that you are not; if you were, by the Clinton years you should have been wise enough to pick up on the fact that both parties were lying through their teeth on the budget numbers. Perhaps you were so overcome with your feelings of relief that the Boskin Commission passed beneath your notice?

Our debt has gone up every year since 1957. If there was an actual surplus, the debt would have gone down. This is literally kindergarten-level math here. Make more than you spend, debt goes down; make less, debt goes up. Seriously, if you dispute this point then we have to first decide what language we are speaking, because whatever language you are using it is not standard American English.

I mean really, how can you throw third party links at me that contradict the Treasury's own publicly published numbers on the debt? And the second one even admits it is speculation, so you should know better than to pretend that is in any way factual or real.

Just in case it is not clear: The CBO numbers are not authoritative, they are predictions and speculation. The US Treasury numbers are actual hard indisputable fact, unlike the other, erroneous sources. And factcheck.org is a political organization with an agenda, which is even less authoritative.

By the way, what factcheck.org is referring to is the same link given to me by another person elsewhere on this thread, except oddly missing the explanation of what the numbers on the charts actually represent - which is speculation and adjusted/massaged predictions, not actual fact as are the Treasury numbers. The Treasury is not going to say it owes more than it does, and that would have to be the case if the assertion of a surplus were to be credible.

Absolutely wrong. Budget surpluses do not automatically make the debt go down on their own. Someone has to apply those surpluses to the debt. It is entirely possible to incur budget surpluses without decreases in the debt, otherwise Clinton would not had to have proposed that the surpluses be used to pay down the debt.

If what you said were true we'd have an account surplus on hand at the Treasury, and the Treasury wouldn't have issued extra debt because it wouldn't have needed to.

Treasury doesn't sit on piles of money, it only has a few weeks of actual operating capital on hand. The Treasury doesn't issue debt out of habit or under compulsion, it issues debt to finance operations. If the cash were on hand in the form of an actual surplus, that would be directly manifested in a lessening of the overall debt.

Clinton's proposal was disingenuous, and he knew it, not just because there never was an actual surplus, but because that very goal would have been accomplished by the default operations of the Treasury in simply issuing less debt than it needed to roll over outstanding bonds.

The reason they claim a surplus is because they push liabilities off balance sheet and pretend they don't exist. The reason to use the Treasury numbers is not only that they are hard fact, but that they moot all the accounting games politicians play to make you think the fiscal situation is a great deal better than it actually is.

Trying to deny one of the hallmark accomplishments of the Clinton administration is quite odd.

Simple questions: by federal law, SS account surpluses must be invested in what? How does the Federal Reserve pay down debt?

a) Special Treasury Bonds, AKA worthless pieces of shit that will leave a trail of tears in the wake of its broken promises, also AKA the funding source for Bush I and Bush II's Middle Eastern Adventure Tours.

b) it doesn't, because the Fed doesn't issue debt - it doesn't need to, it can literally will money into existence to pay for whatever it wishes to pay for. It is a creditor to the Treasury, not a debtor.

Look, Clinton did a good thing in moving us in the right direction, but we never actually got to a surplus and the Treasury's debt numbers prove it. Why would anyone take a loan when they didn't need the money?

Federal Reserve actually works and how it interacts with the U.S. Treasury.

"According to the latest projections from the Congressional Budget Office (CBO), the authoritative and non-partisan fiscal watchdog, America could see fiscal surpluses from 2002 to 2007."

http://www5.economist.com/node/155784


"President Bush's budget would produce deficits totaling $2.75 trillion over the next decade, the Congressional Budget Office projected Friday in the first authoritative look at the plan's longer-range implications."

http://www.usatoday.com/news/washington/2004-02-27-budget_x.htm


"Authoritative figures from the non-partisan Congressional Budget Office show..."

http://www.cbpp.org/cms/?fa=view&id=3139


I'm not sure why you think someone would choose to ignore FactCheck.org, Politifact.com, and the CBO in favor of some guy making stuff up on the Internet. Are you by any chance related to John Kyl?

Do you understand the difference between a CBO prediction and actual debt numbers from the Treasury?

Do you realize that the CBO has a very long history of overoptimistic budget projections that have turned out to be not only wrong, but dramatically wrong, time and time again?

Do you even understand the difference between present and future tense? Would, could. These are not actual events and actual happenings. These are what people thought at the time would happen, and they turned out to be very, very wrong.

You took the quote in the title out of its context and falsely used that to make a wild case about somebody telling lies, which is a common propaganda tactic.

http://www.google.com/imgres?imgurl=&imgrefurl=http://www.brillig.com/debt_clock/faq.html&h=407&w=474&sz=6&tbnid=yZqULcytMSqhMM:&tbnh=111&tbnw=129&prev=/search%3Fq%3Dnational%2Bdebt%2Bgraph%26tbm%3Disch%26tbo%3Du&zoom=1&q=national+debt+graph&hl=en&usg=__n2XbcDsG9A4AFTDo6Et876Pe_q8=&sa=X&ei=RoOmTeKKK4-osAPb0uH5DA&sqi=2&ved=0CBoQ9QEwAA

That chart is not made from the correct data.

We have not had a single year since 1957 where the actual national debt has gone down. If you think otherwise, name the year.

Or just go to the Treasury Dept. site itself (a bit more authoritative than that other source, wouldn't you agree?) and look.

http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt_histo4.htm

the surpluses were after that. Duh.

When? Name the year.

Here's 2000 to present (which you could easily have found yourself by clicking the well-labeled link at the top of the previously-linked page, by the way):

http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt_histo5.htm

constant dollars.

as in, no game playing, no twisting of facts. Actual real numbers not massaged or manipulated for any political purpose.

It doesn't matter whether they are in "constant dollars" or not, anyway. Any actual surplus in the budget will be reflected in a diminishing absolute number of dollars on the national debt. Since that hasn't happened since 1957, there is no way to credibly argue that we have had a surplus in any year in between, you have to resort to some form of accounting fraud in order to make such an assertion.

Think about this for a second. How could we have budget surpluses, yet the federal debt increases?

Figured it out yet?

In the meantime, go to the CBO website and look at Table F-11. It clearly shows the budget surpluses.

http://www.cbo.gov/ftpdocs/108xx/doc10871/AppendixF.shtml

Try reading your own source material, please.



Estimates. Adjusted. Those are not real, actual numbers. They are manipulated numbers.

I'll tell you exactly how we can have alleged budget surpluses while the federal debt increases. It's called accounting fraud, pushing liabilities "off balance sheet" and pretending they don't exist when presenting your numbers.

This happens to be exactly what the banks did on the way to detonating the economy, by the way. God help us all if that becomes an acceptable method of government accounting.

by law, what must happen to account surpluses like, say, Social Security?

Think hard.

Though if what you have in mind is another form of accounting fraud and balance-sheet games, you can count on it not receiving a happy reception. I can pretty much lay it out on the table that if accounting fraud is acceptable to you then we have nothing more to discuss, because it will never be acceptable to me in any way, shape or form, and the consequences of self-deception are exactly the same as the consequences of inaction - the money runs out, the credit card is cut up, and we get an overnight 60% reduction in the size of the federal government, with cascading budgetary failures and bond defaults down to the municipal level.

the CBO of accounting fraud?

Hardly fair to ask me for my opinion on something you won't describe.

BTW, Isn't it @ 4 A.M. where you are?

and yeah it was 4AM, I'm a work-from-home programmer with a coffee addiction ;)

We were actually in a position to become debt free, Then they went batshit crazy. But we knew it, we just forgot over these last few years. I wrote an opinion for our local paper in 2001 or so stating that Bush was going run up the debt to bankrupt our country in order to privatize everything. This was no secret.

Greenspan, as head of the Federal Reserve, worked for his employers, the banks.

Banks love the debt because they collect interest for the loans they make. No debt, no interest, no money for the banks.

I would hate to see Greenspan pass from this world naturally before he is properly tried and hanged as a traitor.

The surplus was an absence of deficit, the debt remained. The debate was about paying it instead of the talk of defaulting we hear now. The Clinton years were no utopia, the repeal of Glass-Steagle still haunts us, but unlike today they could pass a half sensible law without some impending deadline or catastrophe.

It's the black dudes fault!

Within a few weeks, the NASDAQ had fallen 10 % and the DOW was on its way to its worst year in 20 years in 2000 losing 9 %.

The next year, 2001 was even worse at a minus 12 % DOW which included the drop right after 9-11, making it the worst year in 20 years.

The fall continued into 2002 with the DOW dropping another 22 %, making it the worst year in 20 years.

In short, once the dot.com bubble burst there weren't going to be any surplusses regardless of who was president.

Now who would think the answer to this calamity was to invade Iraq is a whole different question.

I suppose so if you make a living on Wall Street.

which was accomplished by maintaining artificially low interest rates for an extended period of time.

If you look at a historical chart of total debt levels, you can see the 30-year period leading up to 2007 is entirely on the rising slope of an exponentially-increasing debt bubble.

Back out the debt, and you can see that we haven't seen any actual GDP growth in this country in a generation. ALL our growth has been net growth in debt.

But we've now hit the wall, since there's a limit to how much debt can be serviced from finite revenue. In short, this country charged its credit cards to the limit - both in public and private spheres - and now, due to its immense outstanding debt, we are coming to the point where we can't borrow any more since the math shows there's no way we can pay it back.

All we're waiting for now is for the rest of the world to free itself of the prison made by the status of the USD as the world's reserve currency. If you're paying attention, you can see that project progressing quite rapidly, between the IMF's SDR, agreements to use Euros in commodity trades, bilateral and multilateral agreements among the BRIC bloc, and the soaring price of gold. The world is about to hit a monetary reset button and if we don't get our currency in shape FAST we are going to go Weimar in the blink of an eye, as all the formerly-reserve dollars come flooding back into the country, just as the Deutschemark did in Germany in the 1930s as a result of the gold-payment terms of the Treaty of Versailles.

To wit: look at the collapse in income tax revenues since 2008, which still haven't recovered.

I agree with the above poster that the balanced budget of 2000 was illusory.

Don't know how old you are, but if you are old enough to remember the last budget shutdown fights in 1995, Clinton said he'd balance the budget in seven years. The Repubs wanted to balance it in four years.

Meanwhile every month new budget numbers came out showing the deficit smaller and smaller by tens of billions of dollars (which was a lot back then) as huge amounts of extra money came into the treasury than it had expected.

That money was coming from bonuses and stock sales of tech stocks. A person buys intel at $ 4 a share and sells at $ 120 creates a huge amount of extra money to the budget above expectations.

The budget ended up balanced in 2-3 years making the fight kind of superfluous. A $ 200 billion deficit balanced while the two sides argued over $ 40 billion.

Same happened in reverse.

When the market crashed all of the sudden the expected capital gains revenue that the treasury expects dissappeared. And the drop lasted for three years making the deficit get worse and worse.

That's just the obvious revenue losses and gains. With the stock market crash also came companies cutting people and corporations going out of business which led to job losses and extra cost to the federal budget.

In short, want to make the federal budget better? Best thing you can do is make the stock market go up. Unexpected cash will flow into the federal budget.

Unfortunately, we're still far from the 14,000 DOW of the high so it will be a long time before capital gains really start to flow in. We're currently a little over 12,000 so lots of people are still trying to get back to even.

The rich make the bulk of their money from investments. When the market goes down, so do tax revenues.

California is a good example of this. We tax the wealthy at a higher rate than most other states (top 5% pay more than half of the total income tax revenue). Because of Prop 13, we are also heavily dependent on those income taxes to fund our government. You know where the richest of the rich make their money? Investments. The result of this is a tax system that is heavily dependent on the performance of the stock market.

In fact, our Democratic State Controller has directly remarked that California has built a tax system in which the government of a state with 35 million people is dependent on the stock porfolio performance of only a hundred thousand people or so. When they have a bad year, everyone has a bad year.

the smart government would not rely too heavily for revenues on risky investments in volatile markets unless there is no other option available.

That said, I doubt that a very large percentage of the wealth of the top greediest 1 percent is tied up in very risky investments.

after decades of those rates already having dropped, this is particularly true when done while waging war or after the financial costs of 9/11.

The long term rise in national debt can be closely tied to those tax rates being dropped from their 1950-1960s levels, the government has been choked of funds and the debt blows up.

Trickle down has never worked except for those mega-wealthy individuals at the top of the heap.

and the media needs to stop the BS firehose. Dems put us in the black and the chickenhawks put us further into the red.

Stupid should hurt.

By taking us off the gold standard, he removed the hard limit to monetary expansion and we have been living on the front side of a debt bubble ever since. What you are seeing happening now is that bubble bursting, which portends a generation of living on the back side of the debt bubble. Count on a far lower standard of living than what you have been accustomed to.

Although realistically, I think one has to blame the Congress which let Raygun have his way with them, and the voting public which put them in office.

I'm agreeing with the only person I can see:)