The myth that a surplus during the Clinton administration was a myth.

[Toro]

No, Clinton did not take any money out.

Think of it this way.

Let's say you are 40 years old and you promise to put your 70 year old mother in a nursing home when she is 80, or 10 years from now. Poof! You have created a liability for yourself - the amount that you will have to pay in the future for your mother's nursing home in 10 years. Let's say the going rate for a nice home is $2000 a month and you expect her to live to be 90. Your liability is $240,000 for your mother's future nursing home. Now, you haven't actually borrowed anything but your liability has risen. You have essentially created a debt that you owe in the future. To remind yourself, you write an IOU to yourself to pay for it some time down the road. Now, if you made $50,000 a year and spent $40,000 a year, then you've saved $10,000. But your liabilities (debt) has gone up because you've made this promise. That is how you can be in surplus and have your debt rise. This is essentially what happened under Clinton and in his final budgets.

 

[Care4all]

ahhhhhhh.

sounds about right too...saving 10k a year for 10 years STILL won't come close to the $240k needed to pay for the mama's nursing home.

 

[Toro]

You got it.

 

[Toro]

Some argue that there was no budgetary surplus in the last years of the Clinton administration. It is a view that is generally rejected by most people including knowledgeable conservatives, given the paucity of vocal support on the Right for this line of thinking, both then and now.

This is an argument about semantics and language, which some conservatives, either mistakenly or deliberately, are using in an effort to gain political advantage. One may dismiss arguments about language and semantics as unimportant, but communication is a powerful tool to shape perception and the political debate.

(And for the record, I supported Bush for President in 1992 and Dole for President in 1996.)

The argument is best described in this blog, which was written by a software engineer, not by an economist, a financial analyst or a pension fund professional.

While not defending the increase of the federal debt under President Bush, it's curious to see Clinton's record promoted as having generated a surplus. It never happened. There was never a surplus and the facts support that position. In fact, far from a $360 billion reduction in the national debt in FY1998-FY2000, there was an increase of $281 billion.

Verifying this is as simple as accessing the U.S. Treasury (see note about this link below) website where the national debt is updated daily and a history of the debt since January 1993 can be obtained. Considering the government's fiscal year ends on the last day of September each year, and considering Clinton's budget proposal in 1993 took effect in October 1993 and concluded September 1994 (FY1994), here's the national debt at the end of each year of Clinton Budgets:

Fiscal
Year Year
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


As can clearly be seen, in no year did the national debt go down, nor did Clinton leave President Bush with a surplus that Bush subsequently turned into a deficit. Yes, the deficit was almost eliminated in FY2000 (ending in September 2000 with a deficit of "only" $17.9 billion), but it never reached zero--let alone a positive surplus number. And Clinton's last budget proposal for FY2001, which ended in September 2001, generated a $133.29 billion deficit. The growing deficits started in the year of the last Clinton budget, not in the first year of the Bush administration.

Keep in mind that President Bush took office in January 2001 and his first budget took effect October 1, 2001 for the year ending September 30, 2002 (FY2002). So the $133.29 billion deficit in the year ending September 2001 was Clinton's. Granted, Bush supported a tax refund where taxpayers received checks in 2001. However, the total amount refunded to taxpayers was only $38 billion . So even if we assume that $38 billion of the FY2001 deficit was due to Bush's tax refunds which were not part of Clinton's last budget, that still means that Clinton's last budget produced a deficit of 133.29 - 38 = $95.29 billion. [Even though the author is generally incorrect in his argument, he is correct in stating the 2001 year falls under Clinton, not Bush, given that the fiscal year 2001 actually began in October 2000.]

Clinton clearly did not achieve a surplus and he didn't leave President Bush with a surplus.

The Myth of the Clinton Surplus

The first question that should arise is what is the definition of the budget deficit?

Let’s look at a number of sources. First from Michael Burda and Charles Wyplosz (1995) on Wikipedia, from their text book European Macroeconomics, 2nd ed., Ch. 3.5.1, p. 56. Oxford University Press.

The total deficit (which is often just called the 'deficit') is spending, plus interest payments on the debt, minus tax revenues.

Deficit - Wikipedia, the free encyclopedia

Next, my Economics 101 textbook, simply titled Economics, 5th edition, Harper and Row Publishers, c1985. p575.

The budget balance refers to the difference between all government revenue and all government expenditures. … if receipts fall short of outlays, there is a budget deficit.

And from Investorwords, the definition for the federal deficit is

The amount by which a government's expenditures exceed its tax revenues.

Federal Deficit Definition

Thus, as we can see, the definition of the budget deficit is

Government spending less government revenues.​

If one researches the definition of the budget deficit, this is what one continuously finds. It is the standard definition used by economists, financial professionals and fiscal policy experts.

What is also important in the definition of the budget deficit is what it is not.

The definition of “budget deficit” is not defined as the increase in the national debt. You cannot deduce changes in the budgetary balance by calculating changes in national debt.​

It is defined as government spending less government revenues, nothing more.

Increases in the national debt are partly a function of the budgetary balance, but also include changes in actuarial liabilities, including changes in the liabilities and assets of the social security trusts. Changes in the actuarial liabilities of government trusts are not included in the budgetary balance. In fact, they are not included in the budgetary balance by law.

SEC. 13301. OFF-BUDGET STATUS OF OASDI TRUST FUNDS.
(a) [2 U.S.C. 632 note] Exclusion of Social Security from All Budgets.—Notwithstanding any other provision of law, the receipts and disbursements of the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund shall not be counted as new budget authority, outlays, receipts, or deficit or surplus for purposes of—
(1) the budget of the United States Government as submitted by the President,
(2) the congressional budget, or
(3) the Balanced Budget and Emergency Deficit Control Act of 1985.

P.L. 101-508

So by definition and by law, changes in social security liabilities and assets are not included in the definition of the budget deficit or surplus. Thus, extrapolating changes in national debt to determine whether or not the government ran a surplus or a deficit, as in the last column entitled “Deficit” in the table above, is by definition wrong.

As I stated above

In FY2000, total on-balance and off-balance sheet revenues was $2.025 trillion. This is cash that has come into the government. Total on-balance and off-balance sheet outlays was $1.788 trillion. This is the cash the government actually spent. This is the budget of the United States. The Treasury states that the government ran a surplus of $237 billion. This is the operating budget of the United States federal government. $2.025 trillion in cash came in, $1.788 trillion of cash went out. The government ran a cash surplus.

In other words, the government spent less than it took in. Ergo, a surplus.

I will address how the national debt can rise even though the budget is in surplus later.

 

[uscitizen]

i agree with you, and have also posted CBO as my source...and yes, the budget has been greatly misunderstood....and it is simply not true that Clinton did not have a surplus when measured by the same means every president has been measured on balancing the budget....because he DID have a surplus according to those measures.

He, along with his Congress....reduced the huge deficit he inherited, every year he was in office...

The CBO, the official bipartisan agency in Congress reporting on the budget (and that many conservatives have referred to frequently regarding the current budget) reports there were surpluses. And the total debt decreases by over $100 billion in Clinton's last year.

Yet I hear over and over that the surplus was a "myth". So I don't get where the claim there was no "surplus" comes from, other than Murdoch outlets I mean.

Thus this thread.

So far, none of the several people that claimed the surplus was a "myth" which has been according to some proved over and over here have shown up. It's telling.

oh, you will get a response, from divecon and diamond dave for certain! patience is a virtue!

they just are not online now....!

they honestly believe that clinton didn't have a surplus based on opinions which they have read on the subject, so i don't think you will get far with them on this!!!! hahahahaha!
....even with the OMB statistics... I don't know what else to tell ya, except that someday, it may sink in with them...???

Because I believe, that they believe, they are being honest on the subject, I usually just agree to disagree on the subject....but that's just me....it took a bit of arguing and debating the subject before i resided to this position and have just resorted to praying that they will see the truth someday!

Good luck on your part though....maybe you will succeed?

Care

Even if was not a surplus Clinton did a far far better fiscal job with budgets than any of the last 3 republican presidents.

 

[uscitizen]

"In other words, the government spent less than it took in. Ergo, a surplus.

I will address how the national debt can rise even though the budget is in surplus later."

Ohh they do not want to currently discuss that while a Dem is president.
Only while a repub is president.

 

[finebead]

I don't care how you measure the fiscal performance for the year, that's not that important.

But, YOU MUST MEASURE EVERYONE THE SAME WAY!

If you are going to talk about repub deficits without the intergovernmental agency transfers (the IOU in the SS lockbox) for the repubs, then you have to measure the dems the same way. That is the traditional way the deficits are described (yes, we know it is "wrong" given our layman's common sense view of things), then that should be the way the deficits are described for EVERYONE, including Bill Clinton.

My problem with this board is when people want to claim Clinton did not produce a budget surplus, and to do it they switch to a different way of measuring than the way everyone else has been measuring.

Clinton gave a strong performance any way you measure it.

If the repub congress was so important to "restraining" Clinton, they could have restrained Bush also, but they did not do it. So, I don't think they restrained Clinton that much either. The Bush I tax hike, followed by Clinton's tax hike, combined to reduce the deficit, and they did not crater the economy, the economy was just fine, especially late in the decade as the deficits came down and the dollar was strong.

 

[uscitizen]

I don't care how you measure the fiscal performance for the year, that's not that important.

But, YOU MUST MEASURE EVERYONE THE SAME WAY!

But how would politics function if you did that?
Of course politics is more of a malfunction than anything anyway...

 

[Toro]

Another argument that people over which people get confused is that we "borrow from" the social security trusts. That may be technically correct in that the funds pass through the social security trusts before being deposited back into the Treasury but it doesn't convey what we understand as borrowing, at least as it applies to the budget.

Critics of SS argue that the system is essentially pay-as-you-go, with the government essentially depositing IOUs into the trust. This argument usually comes from the Right. For example, the Heritage Foundation writes

First, the Treasury estimates how much of the aggregate tax receipts are Social Security taxes and "credits" the Social Security trust fund with that amount. Then the Treasury "subtracts" the total amount paid in monthly Social Security benefits from the trust fund balance. No money actually changes hands; these are strictly accounting entries.

Any "money" remaining in the trust fund is converted into special-issue Treasury bonds, which are really nothing more than IOUs. In addition, the Treasury pays interest on the trust fund's balance by crediting the trust fund with additional IOUs. These are also strictly accounting entries, and again no money changes hands. After crediting the trust fund with the proper amount in IOUs, the government spends the extra Social Security tax collections just like any other tax revenue--to finance anything from aircraft carriers to education research.

Misleading the Public: How the Social Security Trust Fund Really Works | The Heritage Foundation

It is debatable whether or not this is an accurate description of the SS trusts. Reasonable people can disagree. It can be shown that this system works in exactly the same manner as a regular pension funded entirely by publicly-traded government bonds. But that's neither here nor there. For the sake of argument, note the bold sentence in the quote. "No money changes hands."

Critics of SS, who are generally from the Right, argue that the system is essentially a pay-as-you-go system. But if it is a pay-as-you-go system, then the government is not borrowing from the social security trusts. It is merely using payroll taxes to make SS payments. If this is the case, then there is no borrowing going on, and the cash flows coming into the government are going out as SS payments. These are cash items in the budget, and by definition, a budget balance is cash inflows less cash outflows. Thus, the argument that surpluses only occurred because we were borrowing from the SS trusts to fund our surpluses is misguided.

 

[Toro]

The cash flows of SS look like this

• ----------> Payroll taxes come into the Treasury
• <---------- SS payments are paid out by the Treasury
• The government spends the excess.

If SS were a real pension fund that invested its funds entirely in government bonds, it would look something like this.

• ----------> Payroll taxes come into the pension fund
• The pension fund invests money from payroll taxes in government Treasury bonds
• The government spends the money from the issuance of Treasury bonds
• Treasury bonds earn interest
• <---------- SS payments are paid out by the pension from funds earned through interest and selling government Treasury bonds.

How SS really operates

• ----------> Payroll taxes come into the Treasury
• The government issues nonmarketable bonds to the SS trusts in the amount of the cash coming into the Treasury
• The government spends the money from payroll taxes
• The government credits interest payments to the SS trusts
• <---------- SS payments are paid out and the SS trusts are debited that amount.

Essentially, how SS operates and how it would operate if it were a real pension fund invested 100% in government bonds is exactly the same.

• Money comes into the government.
• The government buys government debt - Treasury bonds for a real pension fund, nonmarketable bonds for SS.
• The government spends the money.
• The trusts earn interest - Interest payments for Treasury bonds in a real pension plan, credits for the SS trusts.
• Payments are made - from interest earned and bonds sales in a real pension fund, debits for the payment amounts of the SS trusts accounts.

The economics are exactly the same.

In truth, the SS system is a bad one. I do not know of any other pension fund that is 100% invested in government bonds. The problems of SS underfunding could be completely wiped out if SS were run like a real pension fund, with the fund investing in stocks, corporate bonds, mortgages, private equity, real estate, etc., like all other pension plans, including the equivalents of SS in Norway and Canada.

 

[NYcarbineer]

BUDGET SURPLUS!

there was indeed a budget surplus and that is undeniable.

Bush in 2001 used the budget surplus as a rationale for his tax cuts.

 

[Trajan]

The cash flows of SS look like this

• ----------> Payroll taxes come into the Treasury
• <---------- SS payments are paid out by the Treasury
• The government spends the excess.

If SS were a real pension fund that invested its funds entirely in government bonds, it would look something like this.

• ----------> Payroll taxes come into the pension fund
• The pension fund invests money from payroll taxes in government Treasury bonds
• The government spends the money from the issuance of Treasury bonds
• Treasury bonds earn interest
• <---------- SS payments are paid out by the pension from funds earned through interest and selling government Treasury bonds.

How SS really operates

• ----------> Payroll taxes come into the Treasury
• The government issues nonmarketable bonds to the SS trusts in the amount of the cash coming into the Treasury
• The government spends the money from payroll taxes
• The government credits interest payments to the SS trusts
• <---------- SS payments are paid out and the SS trusts are debited that amount.

Essentially, how SS operates and how it would operate if it were a real pension fund invested 100% in government bonds is exactly the same.

• Money comes into the government.
• The government buys government debt - Treasury bonds for a real pension fund, nonmarketable bonds for SS.
• The government spends the money.
• The trusts earn interest - Interest payments for Treasury bonds in a real pension plan, credits for the SS trusts.
• Payments are made - from interest earned and bonds sales in a real pension fund, debits for the payment amounts of the SS trusts accounts.

The economics are exactly the same.

In truth, the SS system is a bad one. I do not know of any other pension fund that is 100% invested in government bonds. The problems of SS underfunding could be completely wiped out if SS were run like a real pension fund, with the fund investing in stocks, corporate bonds, mortgages, private equity, real estate, etc., like all other pension plans, including the equivalents of SS in Norway and Canada.

I see. so what happens when the intake of SSI via fica falls below the necessary spends, we take that from general revenues? Then add a iou, which increases our liability down the road...is that correct? and that is expressed in or as what?

 

[Toro]

Some are confused about what occurred in the late 90s regarding the budgetary surplus and the national debt. Some have argued that there was no surplus because national debt rose in the final years of the Clinton Presidency. As has been demonstrated, this characterization is incorrect. The budget balance is the difference between government revenues and spending, nothing more. It does not include changes in the national debt.

Thus, the question is why did the national debt rise even though there was a surplus? And the next question is it a bad thing? The answers may surprise some people.

Why did the national debt rise when there was a surplus?

Counter-intuitively, the reason why the national debt rose was because the economy was doing well. When the economy is doing better than expected, payroll taxes flowing into the SS trust funds are greater than expected. The SS trust funds can only "buy" special issuance nonmarketable government bonds. Thus, when payroll tax revenues are greater than expected, issuance of these special issuance government bonds rises and the national debt rises. Likewise, when the economy is doing poorly, payroll tax inflows are less than expected. The amount of funds in the SS trusts is lower, the SS trusts buy fewer special-issue government bonds and the national debt is less than expected.

Understand, though, that this is merely an accounting function. It affects assets and liabilities of the government and trust fund recipients. It does not affect cash flows, and thus does not affect the budgetary balance.


So was rise in the national debt a bad thing?

It is true that in the last half of the 1990s, total government debt rose. But did it negatively affect the balance sheet of the United States government? In other words, was the rise in the national debt during the last 1990s a bad thing?

To help us understand this question, it is best to use an example.

Let us say that in the first year, the government has total debt of $1,000, including $100 of debt in the social security trust. This is the breakdown of the government’s debt.

Total government debt, year 1
Social security debt -$100
All other government debt -$900
Total government debt -$1,000​

Now, let’s say that in the second year, the government runs a $20 surplus and payroll taxes are $30 all of which go into the SS trusts. Payroll taxes are used to buy government debt in the SS trusts and the surplus is used to pay down other government debt. There is no change in any other debt. The breakdown of the government’s total debt is as follows.

Total government debt, year 2
Social security debt -$130
All other government debt -$880
Total government debt -$1,100​

The debt has gone up even though the government has run a surplus.

This is bad, right?

In this case, no.

Why?

Because we are only looking at one side of the balance sheet.

What the critics fail to recognize is that they are looking only at gross debt.

What matters is not gross debt but net debt, which is total debt less total assets.

Critics who decry the government’s total national debt rising in the last years under Clinton are only looking at total debt, not net debt. This is intellectually flawed. An analogy would be to look only at mortgage debt when assessing an individual's financial health without looking at the value of the house. According to the critics, if you take out a $200,000 mortgage, that’s bad. But it is not bad if the value of your house is $300,000.

It works the same way for the social security trusts. This is what the critics omit.

If you earn $100 and you buy a government bond for $100, your assets now include a government bonds worth $100. The SS trusts do the same thing. Money comes in and they buy bonds from the government.

Let’s look at our example again. Let’s say that in the first year, the government has assets worth $400. The SS trusts are government agencies, and government debt in the SS trust funds is an asset of the SS trust fund. Since the government has $100 in debt outstanding issued to the SS trusts, the SS trusts now have assets worth $100. Thus, the balance sheet of the government looks like this.

Government debt issued to the SS trusts is an asset of the SS trusts. The SS trusts are essentially buying government bonds. If you buy a government bond for $100, you now own a government bond. The SS trusts effectively do the same thing

Total government debt, year 1
Social security debt -$100
All other government debt -$900
Total government debt -$1,000

Total government assets, year 1
Debt issued by the government to the SS trusts $100
All other government assets $300
Total government assets $400

Net government debt, year 1 -$600​

Net debt is total debt less total assets. In this case $1,000 in government debt less $400 in government assets means the government’s net debt is -$600.

It is no different than you owning your house. If you own your house, your balance sheet looks like this.

House $300,000
Less: Mortgage -$200,000
Net equity $100,000​

We do the same thing for the government. What matters is not gross debt but net debt.

Now, let’s look at the example above in year 2, where the government runs a $20 surplus with $30 in payroll taxes, which go directly into buying government debt in the SS trusts. The balance sheet of the government would look like this.

Total government debt, year 2
Social security debt -$130
All other government debt -$880
Total government debt -$1,100

Total government assets, year 2
Debt issued by the government to the SS trusts $130
All other government assets $300
Total government assets $430

Net government debt, year 2 -$580​

As you can see, even though total debt rises, because there is a budgetary surplus, net debt declines when there is a surplus because the value of assets rises.

When one is assessing the fiscal health of the government, one must look at net debt, not total debt. This is what the conservative critics fail to understand.

 

[Toro]

I see. so what happens when the intake of SSI via fica falls below the necessary spends, we take that from general revenues? Then add a iou, which increases our liability down the road...is that correct? and that is expressed in or as what?

No. We would subtract an IOU from the SS trust but our unfunded liability would rise.

Remember that IOUs are assets of the SS trust. When money flows into the SS trusts, it is used to buy government bonds. That increases the debt of the US government but increases the assets of the SS trust. Because the SS trust is an agency of the US government, it effectively zeroes out the net total liabilities of the US government, all else being the same.

Let's look at an example.

Let's say that we need $100 in the SS trust to pay out $100 in claims over the next five years. If payroll taxes are $100, what happens is the $100 is transferred into the SS trusts which is used to "buy" an IOU from the Treasury. The $100 then flows back from the trusts to the Treasury in exchange for the $100 IOU. Hence, the Treasury now has a debt of $100 but the SS trust has an asset of $100 owed to it by the Treasury. $100-$100=$0.

Now, let's say that payroll taxes are $50 instead of $100. Counter-intuitively, this decreases total government debt, doesn't change net government debt but increases unfunded liabilities.

$50 flows into the SS trust, which then lends it back to the government for an IOU worth $50. Now, the Treasury has a debt worth $50, lower than before, but the SS trust only has assets worth $50. But because the SS trust still has to pay out $100 in benefits, we now have an unfunded liability of $50. That is what matters.

Those who focus on the national debt, including intergovernmental debt, mis-understand the nature of liabilities of the central government. National debt isn't relevant. What is relevant is the net debt plus the unfunded liabilities.

Intergovernmental debt is an accounting mechanism that doesn't necessarily reflect what is really owed by the government. What is really owed by the government is the total outstanding public and tradeable debt plus unfunded liabilities.

 

[Norman]

Ever since I started posting here, I've seen in a number of threads with posts from a number of different people who claim that the budget surplus during the Clinton administration was a "myth," and that in fact there was no surplus.

The "fact" that there was no surplus under Clinton has been "proved" here "over and over and over" according to some like DiamondDave, who as of late taken to neg repping me for even asserting otherwise.

I don't know who was debating this point before I got here, but if it was "proved" over and over that a surplus under Clinton was a "myth" they weren't very knowledgeable. Or they get their information for the Murdoch "news" outlets.

So this thread is to settle the matter once and for all.

Those who claim that the surplus during the Clinton administration was a "myth" can use this opportunity to prove me wrong. And since it apparently has been proved "over and over and over" again to have been a myth it shouldn't be too hard to prove it one more time.

+++

Here' *my* proof that there was in fact a surplus:

The Congressional Budget Office is a non-partisan office that keeps budget records for Congress. You can see CBO reports on historical actual budget information in its website here:

http://cbo.gov/ftpdocs/99xx/doc9957/...bles09-web.XLS

Table 1 reports summary budget information, including two measures of the deficit (or surplus). "Total" includes SS surplus tax receipts (and has commonly been used by the Bush administration to measure deficits), and "on-budget" does not (and is therefore the more accurate measure, IMO, since SS taxes are not supposed to be used for general Govt expenditures). Because SS taxes have produced a surplus (about $200 billion) the last couple years, the on-budget surplus is lower than the "total" surplus (and conversely, the on-budget deficit is greater than the "total" deficit).

Follow the table down to the year "2000" and in the third column you can find that the "on-budget" surplus for 2000 was $86.4 billion. In 1999, there was a $1.9 billion surplus. You can see in the next column that the "total" surplus figures are even larger.

The U.S. budget does not include every expenditure -- for example, it has (prior to Obama taking office excludes "non-permanent" expenditures like the Iraq war. By excluding such things, the Bush administration was able to make the deficits look less severe. In 2006 and 2007, for example, the Bush administration claimed deficits of significantly less than $500 billion, while the US Govt actually had to borrow more than $500 billion in each of those years.

So looking at actual borrowing of the US Govt gives another picture of the deficit. For example, last year, the Govt borrowed over a trillion dollars, which is one way of measuring the size of the deficit Obama inhereted.

Did Clinton have a surplus using this measurement?

You can access the total debt of the US Govt from the Treasury Department's website, here:

Debt to the Penny (Daily History Search Application)

Total debt of the US Government:

12/31/1999 $5,776,091,314,225.33
12/29/2000 $5,662,216,013,697.37

The total debt of the US Govt decreased by $114 billion during 2000, Clinton's last year in office.

Showing a true surplus.

+++

So to DiamondDave or anyone else who claims the surplus under Clinton was a "myth," here's a chance to present the "proof" that has been shown "over and over and over" that this surplus is a just a "myth".

Ok I am going to risk this as this is the only post I read.

Anyway there was no surplus because government collects social security but it was not marked as liability. So you have to take the social security surplus (and probably some more) out of the surplus. So government collected 100 bucks in SS but gave back only 50 to retirees. The remaining 50 was marked as surplus, although it is not, as it needs to be paid back when people retire, it is debt to those people, not surplus.

Nowdays the SS is actually running negative so these kind of surplusses can't happen anymore. I wonder when the ponzi scheme will finally collapse.

Yes this is totally "funny" accounting, the SS payments US government owes should be a LIABILITY in other words debt.

 

[Liability]

The myth that the myth was a myth ith mythifying.

Thuffering thucotash.

 

[Oddball]

Remember that IOUs are assets of the SS trust....

Only in the gubmint and the Fed can debts be defined as assets.

 

[Toro]

Ok I am going to risk this as this is the only post I read.

Anyway there was no surplus because government collects social security but it was not marked as liability. So you have to take the social security surplus (and probably some more) out of the surplus. So government collected 100 bucks in SS but gave back only 50 to retirees. The remaining 50 was marked as surplus, although it is not, as it needs to be paid back when people retire, it is debt to those people, not surplus.

Nowdays the SS is actually running negative so these kind of surplusses can't happen anymore. I wonder when the ponzi scheme will finally collapse.

Yes this is totally "funny" accounting, the SS payments US government owes should be a LIABILITY in other words debt.

There was a surplus under Clinton. The increase in national debt under Clinton was because of accounting, not because of cash flows.

I've made several posts in pages 10 and 11 explaining how this occurred. They're long, and kind of boring if you're not into this kind of thing, but they explain how the notion that there were no surpluses is a misconception and a misunderstanding of government accounting and the nature of government liabilities.

 

[Toro]

Remember that IOUs are assets of the SS trust....

Only in the gubmint and the Fed can debts be defined as assets.

Don't be stupid.

Someone's liabilities are always someone else's assets.

I thought you had experience with mortgages?

 

[Oddball]

Really?

Can you go to the bank and get a loan, with someone else's promises to pay you as collateral?