why are people so thick as t believe that clinton was some economic genius and great president, when he was chasing skirts, being impeached and preparing to leave a broken IT bubble and a bin laden at large right on the new presidents desk. yeah, he was pretty great…. history will tell the story from the proper objective perspective..

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@BRob:

Third, there was a surplus; there is no dispute about that….Thus, there is no”myth” that Clinton handed off a budget surplus. It is a fact that is historic, which no spinning can change.

Reality bytes. Again:

Time and time again, anyone reading the mainstream news or reading articles on the Internet will read the claim that President Clinton not only balanced the budget, but had a surplus. This is then used as an argument to further highlight the fiscal irresponsibility of the federal government under the Bush administration.

The claim is generally made that Clinton had a surplus of $69 billion in FY1998, $123 billion in FY1999 and $230 billion in FY2000 . In that same link, Clinton claimed that the national debt had been reduced by $360 billion in the last three years, presumably FY1998, FY1999, and FY2000–though, interestingly, $360 billion is not the sum of the alleged surpluses of the three years in question ($69B + $123B + $230B = $422B, not $360B).

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:

View at EasyCaptures.com

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.

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

So why do they say he had a surplus?

As is usually the case in claims such as this, it has to do with Washington doublespeak and political smoke and mirrors.

Understanding what happened requires understanding two concepts of what makes up the national debt. The national debt is made up of public debt and intragovernmental holdings. The public debt is debt held by the public, normally including things such as treasury bills, savings bonds, and other instruments the public can purchase from the government. Intragovernmental holdings, on the other hand, is when the government borrows money from itself–mostly borrowing money from social security.

Looking at the makeup of the national debt and the claimed surpluses for the last 4 Clinton fiscal years, we have the following table:

View at EasyCaptures.com

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.

Yes, there is a “dispute” about it among those of us who know the truth of the matter.

Yes, the Clinton “surplus” is a well perpetuated myth.

The facts and figures of the matter do not lie.

Feel free to cross reference anything you wish to here.

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An incredibly dumb post. First, the NAS is an exceedingly narrow measure of share value. The S & P 500 is more meaningful as a measure of business activity.

Second, the stock market, even broader measure, is neither the measure of the economy nor the measure of tax revenues.

Third, there was a surplus; there is no dispute about that. There is also no dispute that the GOPer ran up trillions of dollars in debt after Clinton retired debt toward the end of his presidency. Thus, there is no”myth” that Clinton handed off a budget surplus. It is a fact that is historic, which no spinning can change.

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@Trubador:
The graph is to a proper scale, it is a logarithmic scale that many stock charts use. I am certainly not trying to hide anything, as the linear scale actually fits more to my point. I will work up another picture that will show the change. Thanks for pointing it out.

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I hate graphs that are not to proper scale. It tries to hide statistical manipulation. The NASDAQ is much worse than the graph shows. That graph has almost the same measurement from 1k to 5k as it does from 0k to 1k. Spread the graph out to show equal spacing between each 1k and the graph is much more dramatic.

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I am surprised the whole dot com bubble burst isn’t brought up more. Everything tech or internet related was why overhype and Bush had to deal with that coming in, which i think Clinton let get out hand when folks knew there wasmuch to the dot com hype, and then right into 9/11.

I agree Clinton get way too much of a pass and credit for stuff that isn’t true.

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Thanks for all the insightful comments guys, save mittens. Clinton was clearly a beneficiary of the bubble as well as clever accounting as some have pointed out. As I said in the article, Bush’s spending really made me really angry, but in his defense we did need to put our military back together after Clinton took it apart and 9/11 hit. Consider though that while Bush took spending from about 2 to 3 Trillion in 8 years. Obama has managed to take it all the way to 3.8 in 2 years. I’m scared to see what it will be in 4 and heaven forbid 8 years.

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I’ve made this point many times to my lefty friends but it falls on deaf ears. Among many other factors during that time period:

1. Clinton got a windfall from a “bubble economy” that turned out to be built on sand and was in the process of imploding during his final year in office.

2. Clinton got the “peace dividend” paid for by past adminstrations, especially Reagan’s, and by our men and women in uniform. You can see this clearly in the budget numbers by looking at defense spending as a % of GDP.

3. Clinton got lucky to catch the previous trough in oil prices, which ended that decade at $10/bbl. Of course, the underinvestment in new finds during that time period led in the next decade to skyrocketing prices. Count that one as a squandered opportunity to wean ourselves from oil imports.

4. Everyone forgets about the Republican congress that put the kabosh on his expansive plans. I’ll give him props for figuring out which way the wind was blowing and tacking enough to stay in office, something the current adminstration seems not to be doing.

5. People forget the sheer force of demographics. Thanks to action during the Reagan adminstration, Social Security was put on temporarily better footing by extracting more tax money from boomers. As boomers now begin to retire, inevitably the math on such programs is going to work against successive adminstrations. Actually Bush was lucky to get out of Dodge when he did – this bomb is now going off on Obama, and will continue to plague his successors. What would be fair to say is that Obama hasn’t done anything to defuse the bomb, but the fact is he’d have a growing budget problem even if he wasn’t spending money on bailouts and stimulus programs.

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@Romeo13:

“…Bush was hurt by his own spending increases.”

Yes, sadly Bush was no fiscal Conservative. But he was still far more Conservative than the current crop of suicidal Democrats and Obama ever could be. Though there are those who feel Bush was less Conservative, shudder, than Klintonius the Kinky.

I do hope that the next Republican president will, in fact, BE a Republican.

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It might be worth noting that our nation’s decent into the deepest pit of debt it has ever been in has coincided with the greatest and most rapid upward transfer of wealth in history.

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