Why surplus under clinton

So the debt goes up in any given year by the amount of the deficit, or it decreases by the amount of any surplus. The debt the government owes to the public decreased for a while under Clinton, but the debt was by no means erased. Other readers have noted a USA Today story stating that, under an alternative type of accounting, the final four years of the Clinton administration taken together would have shown a deficit.

The principal difference is that under accrual accounting the government would book immediately the costs of promises made to pay future benefits to government workers and Social Security and Medicare beneficiaries. Good Subscriber Account active since Shortcuts. Account icon An icon in the shape of a person's head and shoulders. It often indicates a user profile. Log out. US Markets Loading H M S In the news. Once upon a time, lying was something that was considered wrong in Washington, but under the last two presidents our standards have dropped.

And — the year of the giant Clinton tax hike — was not the turning point in the deficit wars, either. The figure shows the Clinton deficit baseline. What changed this bleak outlook? Newt Gingrich and company — for all their faults — have received virtually no credit for balancing the budget. We have a balanced budget today that is mostly a result of 1 an exceptionally strong economy that is creating gobs of new tax revenues and 2 a shrinking military budget. Now let us contrast this with the Clinton fiscal record.

Again, few economists saw what was happening with any degree of clarity. My colleagues at the Levy Institute were not fooled. Wynne Godley wrote brilliant stuff during this period. The CBO had it all wrong, and they had it wrong because they did not understand the implications of their forecast for the rest of the economy. The private sector cannot survive in negative territory. It cannot go on, year after year, spending more than its income. It is not like the US government.

It cannot support rising indebtedness in perpetuity. It is not a currency issuer. Eventually, something will give. And when it does, the private sector will retrench, the economy will contract, and the government's budget will move back into deficit.

When the government is running a surplus, it no longer has to issue much debt. Bond trader Kevin Ferry, a veteran of the scene, told Business Insider about the panic that was unfolding over the government's lack of debt. Everything changed. While the government dramatically slowed down issuance of Treasuries, Fannie and Freddie picked up the baton and started selling debt like never before. There was no bill auctions. Total agency issuance of mortgage backed securities spiked in and , and from then on they never looked back.