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The True Federal Deficit   December 7th, 2008
       

 
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Ever since I wrote an article challenging the myth of the Clinton surplus, skeptics have been searching out ways to refute it. Some suggest I don't understand the difference between the debt and the deficit (I do). Others claim that I'm ignoring the CBO numbers (even though I explained that in the original article).

I then wrote a follow-up article that explained the exact accounting that allowed a real deficit to be claimed as a surplus by Clinton. That article really was the final nail in the coffin of the Myth of the Clinton Surplus. It demonstrated that even if we omit Social Security from the calculations, the remaining "surplus" only existed due to surpluses in other trust funds.

Yet the critics of the articles do have a point in that we must use the same definition of "surplus" for all presidents. I never suggested otherwise in the article. I simply debunked the common myth that Clinton ever had a surplus and that Bush turned it into a deficit. Except to Washington insiders, they all have had deficits. The only reason I singled out Clinton in the original article is because he's the only one that has claimed a surplus based on Washington's twisted accounting, and only his avid supporters faithfully cling to that urban legend.

But it's worthwhile to look at the real deficits that each recent president has had.
So let's do that.

The chart below indicates the president responsible for the budget a given year, the fiscal year in question, the size of the national debt at the beginning of that fiscal year, the size of the national debt at the end of that fiscal year, the real deficit (the amount the national debt increased during the year), and the claimed deficit. The claimed deficits come from historical table 1.1 of the 2009 Federal Budget (page 25 of the PDF), except for the claimed deficit of 2008 which was obtained from table 1 of the September 2008 Monthly Treasury Statement . The figures for the national debt come from the U.S. Treasury Bureau of the Public Debt . The numbers in parenthesis in the "claimed deficit" column indicate claimed surpluses.

President Budget Year Starting National Debt Ending National Debt Real Deficit Claimed Deficit
CARTER FY1978 $698.840 B $771.544 B $72.704 B $59.185 B
FY1979 $771.544 B $826.519 B $54.975 B $40.726 B
FY1980 $826.519 B $907.701 B $81.182 B $73.830 B
FY1981 $907.701 B $997.855 B $90.154 B $78.968 B
  $299.015 B $252.709 B
REAGAN FY1982 $997.855 B $1,142.034 B $144.179 B $127.977 B
FY1983 $1,142.034 B $1,377.210 B $235.176 B $207.802 B
FY1984 $1,377.210 B $1,572.266 B $195.056 B $185.367 B
FY1985 $1,572.266 B $1,823.103 B $250.837 B $212.308 B
FY1986 $1,823.103 B $2,125.303 B $302.200 B $221.227 B
FY1987 $2,125.303 B $2,350.277 B $224.974 B $149.730 B
FY1988 $2,350.277 B $2,602.338 B $252.061 B $155.178 B
FY1989 $2,602.338 B $2,857.431 B $255.093 B $152.639 B
  $1,859.576 B $1,412.228 B
BUSH SR. FY1990 $2,857.431 B $3,233.313 B $375.882 B $221.036 B
FY1991 $3,233.313 B $3,665.303 B $431.990 B $269.238 B
FY1992 $3,665.303 B $4,064.621 B $399.317 B $290.321 B
FY1993 $4,064.621 B $4,411.489 B $346.868 B $255.051 B
  $1,554.057 B $1,035.646 B
CLINTON FY1994 $4,411.489 B $4,692.750 B $281.261 B $203.186 B
FY1995 $4,692.750 B $4,973.983 B $281.233 B $163.952 B
FY1996 $4,973.983 B $5,224.811 B $250.828 B $107.431 B
FY1997 $5,224.811 B $5,413.146 B $188.335 B $21.884 B
FY1998 $5,413.146 B $5,526.193 B $113.047 B ($69.270 B)
FY1999 $5,526.193 B $5,656.271 B $130.078 B ($125.610 B)
FY2000 $5,656.271 B $5,674.178 B $17.907 B ($236.241 B)
FY2001 $5,674.178 B $5,807.463 B $133.285 B ($128.236 B)
  $1,395.974 B ($62.904 B)
BUSH FY2002 $5,807.463 B $6,228.236 B $420.773 B $157.758 B
FY2003 $6,228.236 B $6,783.231 B $554.995 B $377.585 B
FY2004 $6,783.231 B $7,379.053 B $595.822 B $412.727 B
FY2005 $7,379.053 B $7,932.710 B $553.657 B $318.346 B
FY2006 $7,932.710 B $8,506.974 B $574.264 B $248.181 B
FY2007 $8,506.974 B $9,007.653 B $500.679 B $162.002 B
FY2008 $9,007.653 B $10,024.725 B $1,017.072 B $454.806 B
  $4,217.262 B $2,131.405 B
President Budget Year Starting National Debt Ending National Debt Real Deficit Claimed Deficit

Comparing Claimed and Real Deficits

As can be seen very clearly in the table, every year the "official" claimed deficit is smaller than the amount by which the national debt went up. This is true under both Republican and Democrat presidents. Sometimes the differences between the two are smaller and sometimes they are larger, but the real deficit (calculated by the amount the national debt increased) is always larger than the deficit the government claimed.

Consider the following:
  • The sum of all Carter's claimed deficits was $252.709 billion but the national debt went up by $299.015 billion.
  • The sum of all Reagan's claimed deficits was $1.412228 trillion but the national debt went up by $1.859576 trillion.
  • The sum of Bush Sr.'s claimed deficits was $1.035646 trillion but the national debt went up by $1.554057 trillion.
  • The sum of Clinton's claimed deficits and surpluses actually resulted in a net surplus of $62.904 billion but the national debt went up by $1.395974 trillion--only 30% less than the increase during the Reagan administration.
  • The sum of George W. Bush's claimed deficits (through fiscal year 2008) was $2.131405 trillion but the national debt went up $4.217262 trillion
  • The sum of all the reported deficits of these five presidents is $4.769084 trillion but the national debt has gone up $9.325885 trillion!
Clinton and George W. Bush's figures warrant special attention.

To those who cling to the belief that Clinton had a surplus, please review the official surpluses for the Clinton years (FY1994-FY2001). The sum of the claimed surpluses in the last four years actually exceeds the sum of the claimed deficits in the first four years. The result is that if we believe the official CBO deficit/surplus reports, the overall balance of Clinton's presidency was a net surplus of $62.904 billion. Yet during Clinton's presidency the national debt actually increased by 1 trillion 395 billion 974 million dollars. Those that defend the validity of the government surplus/deficit figures need to explain how an alleged 8-year net surplus of $62.904 billion during the Clinton administration caused the government to increase its debt by $1.395974 trillion. If Clinton's administration took in $62.904 billion more than it spent (the definition of a surplus), then why did it have to borrow another $1.39574 trillion?

George W. Bush's presidency also highlights the same problem. If we add up the official deficits of Bush's seven fiscal years so far, the total is $2.131405 trillion. But detractors correctly point out that Bush has increased the national debt by $4.217262 trillion--almost twice the stated deficits.

It's Time To Stop Blindly Believing The Government

Clearly the U.S. Government is using a very "interesting" (to put it politely) form of accounting. But the huge deficits under President George W. Bush have amplified the disparity between the two numbers so extremely that it seems amazing that anyone still clings to the belief that the government's stated deficits and surpluses reflect reality. If Clinton supposedly had a net surplus of $62.904 billion, why did the government borrow $1.395 trillion during that time? If Bush's deficits have "only" been $2.13 trillion, why then has the government found it necessary to borrow $4.22 trillion?

In the face of such amazing discrepancies I find it incredible that people still cling to the CBO/government numbers. These people are basically saying, "I believe Clinton had a surplus because the government told me so and because I don't hear Bush disputing the Clinton surplus claims." Sure, but do you think Bush is eager to alert the nation to FY2008's $1 trillion deficit when he can use the CBO accounting approach and claim a $454 billion deficit? The government approach to accounting makes all politicians look less bad. Carter, Reagan, Clinton, Bush, Obama... these are politicians, folks. Politicians are not known for their truthfulness. So why are so many people so willing to blindly accept the numbers they give us?

I think it's time that we the people stop tolerating smoke and mirrors in Washington. If the national debt increases in a given year, that's a deficit. If the national debt decreases in a given year, that's a surplus. It's really pretty simple and the beauty is that any citizen can check to see how the government is doing every day by looking at the current national debt. The U.S. Treasury Department updates the number every day. To the penny. Don't trust politicians to tell you how fiscally irresponsible they have been with your money. Check the U.S. Treasury that tells you exactly what we owe. Politicians can say anything they want but, in the end, all that matters is our current debt. That's their real legacy and the only number that will make any difference years later.

With the U.S. Government authorizing a $700 billion blank-check bailout with no transparency and no oversight and President-Elect Obama telling us that "we shouldn't worry about the deficit next year or even the year after" , the truth is we better worry about it. They're spending our money faster than we can pay taxes and, apparently, we the people are the only oversight there is.

In that spirit, I have modified this website so that it will obtain the updated national debt directly from the U.S. Treasury each day. You can see the current national debt on the left sidebar below the articles list--you can also see how much the national debt has increased so far this month, how much it increased last month, and how much it has increased so far this year (since January 1st).

Keep your eyes on those numbers. It's our job. Especially since our politicians in Washington aren't doing theirs.

    NOTE: Read this article for a detailed explanation of why the claimed surplus/deficit doesn't match the real deficit that is indicated by the change in the national debt.


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