The REAL Deficit: Clinton & Bush's numbers fuzzy

Discussion in 'Politics' started by TomVols, Aug 10, 2006.

  1. TomVols

    TomVols
    Expand Collapse
    Administrator
    Administrator

    Joined:
    Oct 30, 2000
    Messages:
    11,170
    Likes Received:
    0
    According to the USA Today article below, the national deficit depends on who you ask. A couple of excerpts:

    "The audited financial statement — prepared by the Treasury Department — reveals a federal government in far worse financial shape than official budget reports indicate, a USA TODAY analysis found. The government has run a deficit of $2.9 trillion since 1997, according to the audited number. The official deficit since then is just $729 billion. The difference is equal to an entire year's worth of federal spending. "

    "The federal government keeps two sets of books. The set the government promotes to the public has a healthier bottom line: a $318 billion deficit in 2005. The set the government doesn't talk about is the audited financial statement produced by the government's accountants following standard accounting rules. It reports a more ominous financial picture: a $760 billion deficit for 2005. If Social Security and Medicare were included — as the board that sets accounting rules is considering — the federal deficit would have been $3.5 trillion."

    "The Clinton administration reported a surplus of $559 billion in its final four budget years. The audited numbers showed a deficit of $484 billion. "

    See the article at http://www.usatoday.com/news/washington/2006-08-02-deficit-usat_x.htm

    I'd love to hear the input of those who are familiar with accounting practicies and standards.
     
  2. Revmitchell

    Revmitchell
    Expand Collapse
    Well-Known Member

    Joined:
    Feb 18, 2006
    Messages:
    38,287
    Likes Received:
    780
    Me to!:thumbs:
     
  3. KenH

    KenH
    Expand Collapse
    Active Member

    Joined:
    May 18, 2002
    Messages:
    32,485
    Likes Received:
    0
    I have been telling folks for years now that the federal government uses the Social Security surplus to mask the true yearly increase in the national debt.

    We have not had a balanced budget since the 1960 fiscal year:

    www.publicdebt.treas.gov/opd/opdhisto4.htm
     
  4. El_Guero

    El_Guero
    Expand Collapse
    Banned

    Joined:
    Jul 4, 2004
    Messages:
    7,714
    Likes Received:
    0
    Somebody cooked the books that you are reporting from.

    They complain that the US budget office is running 2 books, but they were running at least 3 if not 4 sets of numbers (books) in their example.

     
  5. El_Guero

    El_Guero
    Expand Collapse
    Banned

    Joined:
    Jul 4, 2004
    Messages:
    7,714
    Likes Received:
    0
    Most businesses actually use two sets of books within the generally accepted accounting procedures (GAAP). One is cash flow and represents true cash on hand.

    However, in actual accounting procedures cash basis accounting is not usually used for big coorporations (& governments). Yet, accrual basis allows for people to misrepresent future 'expected' earnings.

    The basis of the differences presented in these numbers is upon the future 'expected' earnings. This representation is shady, because we really can guess all day long what the future may hold (another 9-11?), but having said that - the future of our debt is not good.
     
  6. TomVols

    TomVols
    Expand Collapse
    Administrator
    Administrator

    Joined:
    Oct 30, 2000
    Messages:
    11,170
    Likes Received:
    0
    A lot of questions come from this. One I have is this: is there really such a thing as the Social Security "lock-box"? This was debated a bit on C-Span with the author of this article this week.
     
  7. TomVols

    TomVols
    Expand Collapse
    Administrator
    Administrator

    Joined:
    Oct 30, 2000
    Messages:
    11,170
    Likes Received:
    0
    Do you believe we overestimate the destructive nature of deficits since this is money we owe ourselves? Just curious and wanting to stimulate some thought.
     
  8. KenH

    KenH
    Expand Collapse
    Active Member

    Joined:
    May 18, 2002
    Messages:
    32,485
    Likes Received:
    0
    No, there is no lock box.

    This charade of reporting, say, a $400 billion deficit when the national debt actually increased $550 billion will eventually go away as the yearly Social Security surplus gets smaller between now and around 2017. Going forward from there there will be no way to continue the charade of using the Social Surplus(which is spent on other programs) to mask the true size if the yearly deficit.

    All the Social Security trust fund has is a bunch of IOUs from the general budget that will have to be paid back starting around 2018 as Social Security expenditures exceed Social Security revenues.

    At that point, the government will have to increase taxes, cut benefits, or borrow more money to pay these IOUs.

    Historically, governments try to inflate their way out of the economic mess we are getting ourselves into. And those attempts can result in hyper-inflation as in Germany between the two world wars - and then it is easy for a Hitler to come on the scene and promise to make it all better.

    Of course, the Congress could act immediately and make tiny benefit cuts and/or tiny tax increases to avoid a bunch of painful decisions after 2017. But we all know how unlikely that is.

    Eventually, this will move beyond simply green eye-shade contemplations and have real effects in people's lives.
     
  9. KenH

    KenH
    Expand Collapse
    Active Member

    Joined:
    May 18, 2002
    Messages:
    32,485
    Likes Received:
    0
  10. The Galatian

    The Galatian
    Expand Collapse
    Banned

    Joined:
    Aug 18, 2001
    Messages:
    9,687
    Likes Received:
    0
    We were in this fix before, when Clinton came into office. Remember his tax increases? How painful were they? Remember his budget cuts? How drastic were they? And yet they worked. Worked so well, that he actually started paying down the debt by the end of his administration.

    It doesn't take that much. But someone has to have the manhood to do it.

    And that's precisely what's lacking in Washington, today.
     
  11. KenH

    KenH
    Expand Collapse
    Active Member

    Joined:
    May 18, 2002
    Messages:
    32,485
    Likes Received:
    0
    Not so. The national debt increased during each year of the Clinton administration. In fact, it has increased every year since 1960.
     
  12. Revmitchell

    Revmitchell
    Expand Collapse
    Well-Known Member

    Joined:
    Feb 18, 2006
    Messages:
    38,287
    Likes Received:
    780
    What budget cuts? Oh, you mean the all but completely dismantling of our military and CIA. Yea I remember those. Then Bush came into office and in 8 short months we were attacked by terrorists because our intelligence was not up to par. Yea those tax cuts. Remember them well.
     
  13. StraightAndNarrow

    StraightAndNarrow
    Expand Collapse
    Banned

    Joined:
    Dec 24, 2003
    Messages:
    2,508
    Likes Received:
    3

    According to the article posted, the more realistic numbers show a deficit of $484 billion in Clinton's final FOUR years. In 2005 alone the Bush administration ran a deficit of $760 billion. Who was more fiscally conservative?
     
  14. KenH

    KenH
    Expand Collapse
    Active Member

    Joined:
    May 18, 2002
    Messages:
    32,485
    Likes Received:
    0
    You won't find me defending the Bush administratrion's fiscal profligacy.

    I was simply pointing out that the federal budget has not been balanced since 1960.

    To be accurate, the 2005 federal deficit was $554 billion. The federal deficit for the second Clinton term was $449 billion.

    www.publicdebt.treas.gov/opd/opdhisto4.htm
     
    #14 KenH, Aug 11, 2006
    Last edited: Aug 11, 2006
  15. StraightAndNarrow

    StraightAndNarrow
    Expand Collapse
    Banned

    Joined:
    Dec 24, 2003
    Messages:
    2,508
    Likes Received:
    3
    I got those numbers from the original article from USA Today.

    The set the government doesn't talk about is the audited financial statement produced by the government's accountants following standard accounting rules. It reports a more ominous financial picture: a $760 billion deficit for 2005. If Social Security and Medicare were included — as the board that sets accounting rules is considering — the federal deficit would have been $3.5 trillion.

    The Clinton administration reported a surplus of $559 billion in its final four budget years. The audited numbers showed a deficit of $484 billion.
     
  16. The Galatian

    The Galatian
    Expand Collapse
    Banned

    Joined:
    Aug 18, 2001
    Messages:
    9,687
    Likes Received:
    0
    For one, reducing the federal non-military payroll to 1960 levels. Clinton outsourced a lot of work by contract, and reduced the federal workforce by attrition. This gave the government the flexibility to hire workers as needed, instead of keeping them on the payroll.

    You might check the numbers in the Statistical Abstract of the US (online) if you'd like the details.

    Reduction in federal regulations under "reinventing government." It wasn't just good business, it also reduced the number of enforcement people. More savings.

    That was Bush. Clinton set up Project Catcher's mitt to track Osama. Bush killed the program, not Clinton. One FBI agent admitted that he almost fell off his chair when he realized that Bush had taken terrorism off the list of priorities. Clinton bombed Osama's facilities in Sudan, and successfully pressured Sudan to shut down his network there. It was on Bush's watch that the FBI agent in charge of tracking Osama quit in protest because political pressure was being applied to protect Saudis in the US.

    As Cheney once admitted, Bush's war was fought with Clinton's equipment. The reason that we so easily beat the Iraqis was the huge number of smart bombs used. But they are extremely expensive. Clinton had the Air Force contract to retrofit old bombs with smart systems at a fraction of the price of new ones. So we had an abundance of them, and it worked to our advantage.

    "After the 1991 Persian Gulf War, McPeak skipped the ticker-tape parades, believing victory was a poor teacher. Instead, the former fighter pilot appointed only nine months earlier by President Clinton, pored over after-action reports from the Gulf. He was looking for flaws in the seemingly invincible armor of air power. It didn't take long to find a big one."
    http://www.govexec.com/features/0803/0803s1.htm

    Clinton went forward with the Abrams tank, a spectacular success that turned the tables on the Soviets, who prior to that always had superior armor.

    So do many of the generals. Why do you think so many of them have retired and blasted Bush.

    Once Bush shut down the programs tracking Al-Qaeda, it was a matter of time.

    Well, maybe you need to go do some refreshing. The build-up of military power under Clinton was well-documented. The JDAM program alone saved many millions, and made our bombers much more effective.
     
  17. The Galatian

    The Galatian
    Expand Collapse
    Banned

    Joined:
    Aug 18, 2001
    Messages:
    9,687
    Likes Received:
    0
    Keep in mind the difference between the debt (total amount owed) and the deficit (the amount of red ink each year) Clinton cut the deficit every year. But the debt contrinued to grow.

    It's not that Clinton did a miracle; he just made it better. Bush made it worse. That's all.
     
  18. TomVols

    TomVols
    Expand Collapse
    Administrator
    Administrator

    Joined:
    Oct 30, 2000
    Messages:
    11,170
    Likes Received:
    0
    It's amazing how people will ignore facts to defend Clinton or Bush, or whomever.

    Back to the substantive discussion: isn't there an argument to be made for not including SS? For instance, you could include your cable bill in your family's budget, and probably should. But should you do it long term (say, longer than 1-3 years)? After all, you can cancel the service and void the debt at any time.

    By the way, thanks KenH for your contributions. There aren't many around here that actually can talk the language of accounting and it helps to know what you're talking about to have this kind of discussion, though as usual here in the Politics forum, it doesn't stop some people :laugh:
     
  19. jet11

    jet11
    Expand Collapse
    New Member

    Joined:
    Mar 14, 2003
    Messages:
    266
    Likes Received:
    0
    Why do we have to pay for the stupidity of our leaders (Republican or Democrat) as in increasing our taxes? Why can't they do what we have to do when it comes to paying our bills? I can't run to my boss and ask for a raise when I am spending beyond my means

    National defense, where Clinton decided to slash the budget, is one of the few responsibilities for which the Federal government is responsible. Spending on social programs should be cut first before raising taxes is ever proposed as a solution to the deficit. Why do we penalize those who work hard in this country, and give to those who are able-bodied but refuse to work? I know there are some instances when people need assistance, but it should never be a way of life. Unfortunately, our power hungry politicians have made it just that...a way of life.

    By the way, I am a Republican who is fed up with the out of control spending that my party has helped continue and increase. KenH has me seriously considering switching to the libertarian party.
     

Share This Page

Loading...