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Wrong, there was no surplus, it was all Washington doublespeak. There are two parts to the national debt - public debt and intragovernmental holdings. During the Clinton years the public debt part was paid down by borrowing money in the intragovernmental holdings mostly from Social Security. So the debt was not paid down, excess Social Security funds that by law are required to be re-invested into securities became additional intragovernmental debt. During the Clinton years the national debt total continued to rise:

FY1993 $4.411488 trillion debt FY1994 $4.692749 trillion debt, increase of $281.26 billion FY1995 $4.973982 trillion debt, increase of $281.23 billion FY1996 $5.224810 trillion debt, increase of $250.83 billion FY1997 $5.413146 trillion debt, increase of $188.34 billion FY1998 $5.526193 trillion debt, increase of $113.05 billion FY1999 $5.656270 trillion debt, increase of $130.08 billion FY2000 $5.674178 trillion debt, increase of $17.91 billion FY2001 $5.807463 trillion debt, increase of $133.29 billion

FY2001 was Clinton's last budget submitted before Bush took office.

Wrong, there was no surplus, it was all Washington doublespeak. There are two parts to the national debt - public debt and intragovernmental holdings. During the Clinton years the public debt part was paid down by borrowing money in the intragovernmental holdings mostly from Social Security. So the debt was not paid down, excess Social Security funds that by law are required to be re-invested into securities became additional intragovernmental debt. During the Clinton years the national debt total continued to rise:

FY1993 $4.411488 trillion debt
FY1994 $4.692749 trillion debt, increase of $281.26 billion
FY1995 $4.973982 trillion debt, increase of $281.23 billion
FY1996 $5.224810 trillion debt, increase of $250.83 billion
FY1997 $5.413146 trillion debt, increase of $188.34 billion
FY1998 $5.526193 trillion debt, increase of $113.05 billion
FY1999 $5.656270 trillion debt, increase of $130.08 billion
FY2000 $5.674178 trillion debt, increase of $17.91 billion
FY2001 $5.807463 trillion debt, increase of $133.29 billion

FY2001 was Clinton's last budget submitted before Bush took office.

I make this distinction because, in recent memory, Bill Clinton has been the only US president who has actually decelerated the increase in US national debt. When he left office [IIRC] he did so leaving his successor, George W. Bush, with a tiny budgetary surplus.

The US government when Clinton was POTUS didn't run a surplus because the government collected more taxes than it spent - it hasn't done that for a long time. Rather it borrowed money from the social security trust fund and spent it. Well it's a bit more complex than that, but that was the net result :

http://www.craigsteiner.us/art...

Notice that while the public debt went down in each of those four years, the intragovernmental holdings went up each year by a far greater amount--and, in turn, the total national debt (which is public debt + intragovernmental holdings) went up. Therein lies the discrepancy.

When it is claimed that Clinton paid down the national debt, that is patently false--as can be seen, the national debt went up every single year. What Clinton did do was pay down the public debt--notice that the claimed surplus is relatively close to the decrease in the public debt for those years. But he paid down the public debt by borrowing far more money in the form of intragovernmental holdings (mostly Social Security).

Update 3/31/2009: The following quote from an article at CBS confirms my explanation of the Myth of the Clinton Surplus, and the entire article essentially substantiates what I wrote.

"Over the past 25 years, the government has gotten used to the fact that Social Security is providing free money to make the rest of the deficit look smaller," said Andrew Biggs, a resident scholar at the American Enterprise Institute.

Interestingly, this most likely was not even a conscious decision by Clinton. The Social Security Administration is legally required to take all its surpluses and buy U.S. Government securities, and the U.S. Government readily sells those securities--which automatically and immediately becomes intragovernmental holdings. The economy was doing well due to the dot-com bubble and people were earning a lot of money and paying a lot into Social Security. Since Social Security had more money coming in than it had to pay in benefits to retired persons, all that extra money was immediately used to buy U.S. Government securities. The government was still running deficits, but since there was so much money coming from excess Social Security contributions there was no need to borrow more money directly from the public. As such, the public debt went down while intragovernmental holdings continued to skyrocket.

The net effect was that the national debt most definitely did not get paid down because we did not have a surplus. The government just covered its deficit by borrowing money from Social Security rather than the public.

The last time the US government ran a true surplus was in the 60's.

https://www.answers.com/Q/When...

Clinton did not have a surplus of $230B in the year 2000 because he had to borrow $246.5 From numerous other off budget funds. Clinton NEVER ran a surplus during his 8 years in office, he just borrowed yearly from different budgets, (primarily the SS budget) to offset the general fund losses. In 2000 the following funds were borrowed which resulted in a $16.5 deficit.

$152.3B from Social Security
$30.9B from Civil Service Retirement Fund
$18.5B from Federal Supplementary Medical insurance Trust Fund
$15.0B from Federal Hospital Insurance Trust Fund
$9.0B from the Federal Unemployment Trust Fund
$8.2B from Military Retirement Fund
$3.8B from Transportation Trust Funds
$1.8B from Employee Life Insurance & Retirement fund
$7.0B from others

Total borrowed from off bu

There was no balanced budget under Clinton although the budget was probably better than now.

Please read these two articles:
http://www.craigsteiner.us/articles/16
http://www.craigsteiner.us/articles/30

There was no balanced budget under Clinton although the budget was probably better than now.

Please read these two articles:
http://www.craigsteiner.us/articles/16
http://www.craigsteiner.us/articles/30

It also did not include actualizing the social security debt or some of the other debts / trickery that was used to create the supposed surplus. It's explained here:

http://www.craigsteiner.us/articles/16

You can verify it here (U.S. Treasury site):
http://www.treasurydirect.gov/NP/NPGateway

Enter 09/30/1997 through 10/01/2001 for range and look at 9/30 for each year.

Insightful yes, it is a little muddier than this. Almost half of the debt is owed to other government accounts. They've been consistently borrowing from Social Security to pad their budgets. So, we have to worry about spooking the holders of the other ~$7 trillion. A big number, definitely, but everyone should be aware of the shell game going on in Washington. Go read this article on the Clinton surplus: http://www.craigsteiner.us/articles/16

I agree that the Roth IRA stuff is a little tangential, but I've now bothered to look up the numbers, and there were only $77B in Roth IRAs in 2000. Even taxed at the highest rate (40%) and with nobody contributing to new Roth accounts but only doing a one-time rollover, and with the remaining trillions in non-Roth IRAs never being converted, the income to the government was at most $50B or so spread over the previous two years--a factor, perhaps, but a modest one at best given the differences in deficits (>$200B over several years).

Actually, that $127B number is a bit misleading. The total value was the reported values as of tax year 2000. We have the Dot com bubble bust and a lot of money fall from the markets which most likely deflated that a little. The article even mentions on the first page about a decline in market value of $177 Billion. So the conversion rates could have been a lot larger.

But we are also talking about capitol gains Cuts too. If you look to the very last graph, you'll notice that they underestimated the impact of capitol gains by 84 billion dollars over the first three years (97,98,99). Now, we can't take a direct inference of the total amount benefit from the capitol gains cuts because they already estimated for an increase. If we look at Table one on this page, you will notice that it took 15 years for the capitol gains realizations to move 100 billion dollars (1980-1995) but between 1997 and 200, it moved almost 300 billion. Of course the capitol gains reduction was effective in may of 1997. So when you start adding them all together, you start seeing numbers equal to most of the so called surplus.

I had noticed that the "surplus" didn't actually decrease the debt (easy enough to do, if you look at the debt graph), but I appreciate the article pointing out why. Of course, that wasn't unique to Clinton, and it didn't matter for my point (or yours, as far as I know) that Clinton actually ran a surplus--the point, which remains true when one avoids accounting gimmicks, is that Clinton reduced the level of deficit spending over quite a number of years.

Lol.. I think you missed the entire point of the articles. You see, it wasn't that Clinton did anything special or spent the money on something other then paying the debt. As was noted in the link I provided, which was created by the same author you cited in your second link as well as that article being additional support for the one I posted.... Anyways, I lost myself for a second. The point is that the article you pointed to was in support of the first article I used which stated that the surplus was only because they counted debt as income due to public trust fund laws. The example they gave was "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? While you can claim "I received $35,000 and only spent $32,000, thus I have a surplus," that's a pretty weak argument when you know that $2,000 of the money you spent was actually borrowed and has to be paid back later. That's pretty much what happened in 2000."

But, anyway, back to the question of whether Bush did anything to impact whether the rich get richer and the poor get poorer. First, the point that the poor got a larger fractional tax cut than the rich is not the right number to look at--it's the *fraction of income* not the *fraction of tax* that leads to a flattening or accentuation of wealth differences. From http://www.nytimes.com/2007/01/08/washington/08tax.html in 2004, the net wealth increase from the tax cuts was about 2% for middle-income people and about 4.5% for the top income bracket. At the same time, it is true that

I agree that the Roth IRA stuff is a little tangential, but I've now bothered to look up the numbers, and there were only $77B in Roth IRAs in 2000. Even taxed at the highest rate (40%) and with nobody contributing to new Roth accounts but only doing a one-time rollover, and with the remaining trillions in non-Roth IRAs never being converted, the income to the government was at most $50B or so spread over the previous two years--a factor, perhaps, but a modest one at best given the differences in deficits (>$200B over several years).

Roth IRA data: http://findarticles.com/p/articles/mi_m2893/is_4_23/ai_n6171206
Honest deficit data: http://www.craigsteiner.us/articles/32

I had noticed that the "surplus" didn't actually decrease the debt (easy enough to do, if you look at the debt graph), but I appreciate the article pointing out why. Of course, that wasn't unique to Clinton, and it didn't matter for my point (or yours, as far as I know) that Clinton actually ran a surplus--the point, which remains true when one avoids accounting gimmicks, is that Clinton reduced the level of deficit spending over quite a number of years.

But, anyway, back to the question of whether Bush did anything to impact whether the rich get richer and the poor get poorer. First, the point that the poor got a larger fractional tax cut than the rich is not the right number to look at--it's the *fraction of income* not the *fraction of tax* that leads to a flattening or accentuation of wealth differences. From http://www.nytimes.com/2007/01/08/washington/08tax.html in 2004, the net wealth increase from the tax cuts was about 2% for middle-income people and about 4.5% for the top income bracket. At the same time, it is true that the tax code was more "progressive" afterwards than before when looking at the rates of taxation; it's just that we already barely tax middle-to-lower income folks so that we're out of room to make income more progressive (as opposed to tax levels) while still lowering taxes.

I don't think we actually disagree about debt all that much. People at all income levels go into debt to buy nonessential items, and that always makes it harder to build long-term wealth. To some extent, these are errors in judgment--and to some extent, therefore, saying that if you make these errors you will be in bad shape is a fair way to discourage these sorts of errors. But it is still of concern that people *do* make these sorts of errors and do so on a sufficiently large scale to hobble the entire economy.

The whole economic system is a human construct. People create a certain quantity of goods and services, and they also are entitled (via their income) to some fraction of those goods and services. Surely you are not saying that one cannot distribute the fraction unequally (perhaps "fairly" but unequally), and then from that starting point make it even more unequal. Of course one can do that! The key question is does that *actually* happen, and if so is the decrease in the fraction more than offset by an inexorably linked increase in the total created goods and services (inexorably because the increase comes from the incentive to increase one's own fraction).

Here's an example of such a policy: the minimum wage. The evidence that I can find: http://www.ibrc.indiana.edu/IBR/2008/fall/article1.html suggests that modest increases in the minimum wage do not influence employment numbers. Thus, within modest limits at least, altering the minimum wage is a way to influence the fraction of economic output given to various groups. Republicans blocked minimum wage increases until the Democrats had too great of control over Congress. See http://oregonstate.edu/instruct/anth

You have some interesting points to make about the deficit, but unfortunately the dates of the capital gains tax bill (1997) and the creation of Roth IRAs (1998) don't match any significant change in what's going on in the budget (see http://www.scribd.com/doc/3015540/US-Budget-Deficit-or-Surplus-1960present where the decrease in the budget deficit was remarkably linear over Clinton's eight years).

?Your chart doesn't contain enough information to accurately assess the situation. Despite that, you cannot deny that the Roth IRA conversion as well as the capitol gains reductions created an increase Taxable income which also increase taxes as well as Social security revenue. It's all smoke and mirrors that has convinced you of the surplus or that the mechanics were sound.

Unless you have compelling quantitative data that supports the importance of these revenue streams (not offset by something else), it looks to me like you're wrong that these were major factors.

No, I'm not wrong, I'm just looking at all the facts, not the ones that allow me to create an illusion. It's all there and availible.

It is true that Clinton got a nice dividend from the end of the Cold War. There is, to say the least, considerable controversy over whether the spending in the War on Terror was necessary or even useful (and whether it even makes sense to call it a war). So I don't think the Presidents can entirely escape from responsibility for government spending, even if happenstance plays a part.

I never said they could. I said that circumstance that were happening during the Clinton years won't be repeatable and it gave him an advantage that other administrations won't have. In other words, if you win the lottery and pay off all your bills but don't adjust your spending appropriately for when the funds run out, you will be broke and in debt once again. Clinton in effect won the lottery.

Before I go to the trouble of tracking down difficult-to-find data, I want to get some indication that it might actually satisfy you. So far you have appealed to individual choice to "refute" a point about human nature ("you don't have to go into debt"--well, yes, true, and you don't have to eat more than will barely avoid starvation, nor do you have to keep warm and/or cool, etc.), and you have also accepted, as far as I can tell, that the natural state of affairs is for wealthy people to have better investment and income-growth opportunities than poor people--and then somehow seem to think that this isn't relevant to the rich getting richer and the poor getting poorer.

No one is going into debt to eat enogh food to not only satisfy them but to be happy. It simply isn't happening. Going into debt isn't even a problem. The problem is where people are going into debt by purchasing new cars instead of older ones when they can't afford the new one. It's when they buy a boat or jet skis instead of paying their health insurance. It's where they are buying too much house for what they can afford for vanity reasons. Making $22,000 a year and having a $700 a month mortgage payment is just stupid. That's 38 percent of their income and they either need to get a better job or rent. Throw a $300 a month car payment plus the costs of insurance on top of that when a couple year old used car would do for far less, and you can easily see how their poor choices made them poor. If we guess that someone is single, under 25, or has a few tickets or something on their record, they should see around a $100 or more a month insurance rate on that new car, They will be spending 60% of their income on debt that they don't need. In contrast, if you rent for $500 a month, or even look at the practical side of things and get mar

the Clinton administration, which ... actually balanced the budget

This has been covered before. Clinton never balanced the budget: http://www.craigsteiner.us/articles/16