The '$5 Trillion Surplus' - The Myth that Refuses to Die

Monday, May 8. 2006

The '$5 Trillion Surplus' - The Myth that Refuses to Die

During an appearance on Meet the Press, House Minority Leader Nancy Pelosi repeated one of the biggest myths coming out of the Clinton presidency: that the federal debt had been erased, and that we had more than a $5 trillion surplus.

This is totally false.

Here's the transcript from Meet the Press:

REP. PELOSI: ... We came out of the Clinton years $5.6 trillion dollars in surplus, surplus. The Bush policies turn that around. Now we’re $9 trillion dollars debt ceiling when we could’ve been eight—debt-free as a nation by 2008.

There was never a $5.6 trillion surplus at the end of the Clinton Administration.

There was at the end of FY 2001, however, about $3.3 trillion in debt held in federal treasuries, and about $5.7 trillion worth of total debt, including that existing in trust funds and other government accounts.

Read the data here.

The claims that we had erased the federal debt and had gone on to a surplus were based on long-range projections that were totally inaccurate, and had never been realized.

Why then do the Dems continue to repeat this myth?

Posted by Tom Elia in Economics at 13:01 | Comments (12) | Trackbacks (2)

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I was saying that very thing while watching MTP yesterday and wondered how they get away with that, I don't think they ever get called on that...why?

#1 SJR on 2006-05-08 15:30 (Reply)

My thoery: it's because people aren't used to dealing with facts. It's much easier to make general charges about liberals and conservatives and chalk it up as meaningful debate.

#2 kreiz on 2006-05-08 17:44 (Reply)

This is a usual canard used by the Democrats. If I am not mistaking, there was a projected budget surplus of about 5 trillion over a ten year period. Of course, this was based on a completely unsustainable growth projection of the technology sector before the dot-com bust. If I recall correctly, the Democrats proposed using some of this projected surplus to pay down the national debt, while the Republicans suggested giving it back to the people in the form of tax cuts. Of course, the growth didnt continue and we hit a recession. With or without the tax cuts, we would have ended up back in deficit territory.

#3 PandaBear on 2006-05-09 02:11 (Reply)

Politicians like Peloshi know that 30% + of their votes come from the welfare class that could care less about the government as long as the check is in the mail. The rest of the left wingers live is some fantasy land far, far away. Reality and truth is not reconized in their world. They eat the lies of people like Peloshi for Breakfast, dinner and supper, but they're educated, just ask them.

#4 Scrapiron on 2006-05-09 11:46 (Reply)

'Why then do the Dems continue to repeat this myth? ' They like to lie or just think it helps them?

#5 Bandit on 2006-05-09 13:40 (Reply)

Bandit, you left off the most likely reason - Pelosi doesn't have a clue that the info is incorrect. Most of our Congressmen and Congresswomen don't know much more than their handlers decide to tell them right before their next news conference. They tend to speak of issues they know nothing more about than the two or three talking points they reviewed that morning.

That is why I love the un-edited press conferences on the C-SPAN channels when someone asks them a question contrary to their previous speech. The "deer in the headlights" looks are priceless.

#5.1 dougrc on 2006-05-09 14:24 (Reply)

It's good marketing. Marketing wins elections.

#6 Jim on 2006-05-09 14:28 (Reply)

Why do the dems repeat this myth? For the same reason they repeat all of the other myths we are exposed to on a daily basis--because they can. When media bias becomes nothing less than active participation as a public affairs and transcription service, favored politicos like Pelosi are able to become even more arrogant in the presentation of utter drivel. Fortunately the new media will eventually expose them, but the day to day assault on fact does have an effect. Of course if the Bush administration did half as much to publicize the truth as LGF, Powerline and Michelle Malkin, Pelosi wouldn't be the minority leader. The dems wouldn't be able to afford it.

#7 Doug Book on 2006-05-10 15:26 (Reply)

The claims that we had erased the federal debt and had gone on to a surplus were based on long-range projections that were totally inaccurate, and had never been realized.

Are you a complete imbecile? Firstly, W used these very same CBO projections to justify and enact the centerpiece of his 2000 campaign--massive tax cuts. Secondly, CBO's projections didn't pane out not because they were inaccurate, but because Bush changed the tax code and thereby changed the basis for the projections.

You can criticize Pelosi for misstating the nature of the surplus (projected vs real), but to overlook the fact that W himself based his entire fiscal policy on these same projections is sheer nuttery.

#8 dougr on 2006-05-13 23:08 (Reply)

Doug,

The four surpluses of the period from FY 1998-2001 were due to two major factors: 1) the massive inflows from capital gains taxes resulting from the stock market bubble (total stock market capitalization in 1996 was about $4 trillion, in 2000 it was about $14 trillion -- all on 67% profit growth in same period), and 2) cuts in real defense spending (more than 80% of the reduction in federal workers -- known as reinventing government -- occurred among civilian defense department workers).

Try replicating either of those two factors today.

Tom

#8.1 Tom on 2006-05-18 09:45 (Reply)

To your little theory, I say whatever. And you sort of left out the 1993 Omnibus Budget Reconciliation Act that the GOP said would doom the economy and the stock market.

But it's neither here nor there. The point is that your tact of "mythologizing" the projected surplus of the Clinton years is 1) bogus, because CBO did indeed make these projections; and 2) it's dishonest because Bush himself cited those projections before and during his presidency to bolster his tax cut ambitions; and 3) it's misleading because Bush changed the presumptions upon which those projections were based.

#8.1.1 dougr on 2006-05-26 17:01 (Reply)

dougr,
Wow, to call someone names for omitting Bush's campaign speeches and as a follow up to say that the projections were faulty because of Bush's tax cuts - omitting that whole recession and terrorist attack thingie on 9/11 - is the height of talking-point hackery.

You do your credibility great harm. I know that the kossacks have admitted that they're over 9/11, but it did happen and a lot more than the lives of ~3,000 citizens were affected.

#9 rw (Homepage) on 2006-05-18 08:52 (Reply)

rw,
It wasn't just during the campaign. As late as the 2002 State of the Union (i.e., post 9/11, post-Taliban, post-recession, post-market bubble) Bush was still claiming that any budget deficit would be "small and short-term."

Perhaps you don't realize that CBO projections are based on the tax policy at the time. So when tax policy changes, like it did in massive fashion in 2001 and 2003, of course those projections won't pan out. It is really dishonest of Tom to cite our current dismal fiscal state as evidence of just how "totally" inaccurate those projections in 2000 were, likening them to some myth that never existed. If you want to argue that, then you have to acknowledge that Bush's fiscal policy is based on those same myths.

#9.1 dougr on 2006-05-26 14:23 (Reply)

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