"Dave Hinz" wrote in message
...

The numbers are black and white, Ed. If you think you can spend allocated
funds twice, then yes, there was a surplus during the Clinton years. Me,
I don't think that it works that way.


Well, I don't have time to go into this in detail, so I'll just say my piece
briefly and move on.

When the SS finances and the rest of the federal budget were combined in
1969, any possibility of making unequivocal evaluations of the total budget
evaporated. The two SS funds that show up as current debt, when Treasury
bonds are bought for the fund, have an obligation that has nothing to do
with whether there are bonds to pay for it. It is, with or without the
bonds, a future debt upon the nation, one that will come due as SS needs
arise. Calling it an addition to "current debt" is an accounting slight of
hand.

So there is a strong argument that counting those bonds as part of the debt
is bogus. The obligation is statutory; whether it comes from buying the
bonds back, or directly from future revenues, IT HAS TO COME FROM THE SAME
FUTURE TAXES EITHER WAY! The bonds are really meaningless pieces of paper,
in other words. Both SS "trust funds" are a fiction.

At the same, the revenues used to buy them have to be balanced by a debt of
some kind, so it makes neat accounting to fold it all up in a
revenue/expense accounting balance by counting the bonds as debt. However,
the revenue has nothing to do with future debt, either. It is current
revenue, used to pay current expenses. So that part of the accounting
balance is bogus as well. The revenues are there; they came in; they are
real. Trying to relate them to future SS payments is the part that is not
real.

That's why the Congressional Budget Office says that these transfers of debt
amount to "reallocating costs from one part of the budget to another; they
do not change the deficit or the government's borrowing needs." [they] "have
no effect on the economy or the government's future ability to sustain
spending at the levels indicated by current policies."

And that's why, as I pointed out in my last message, the Treasury Dept. and
nearly everyone else doesn't count those bonds.

Now, you may still insist on counting them. That's fine, then you'd have to
say that the national debt accumulated *more slowly* during the late '90s
than at any time since 1972. That fact is true either way.

Also, you brushed off the idea of counting debt as a portion of GDP, as
nearly everyone does. They do it for a good reason: because debt has no
economic meaning whatsoever EXCEPT AS a portion of GDP. The percentage
burden upon the economy only has meaning as a portion of GDP. Period. There
is no other meaning to it at all.

So, I'm done. g You may accept these things or not; it doesn't matter,
because everyone who makes the key economic decisions that affect the
national debt, and SS, and so on know them perfectly well, and these are the
basis on which those decisions are being made. And that, I suppose, is as
close as we're going to get here to the bottom line.

--
Ed Huntress