NationStates Jolt Archive

Your comments please



Source:
http://research.stlouisfed.org/publications/review/06/07/Kotlikoff.pdf

I'm still reading the article, but I'm going to venture out on a limb right now and say "No." To my understanding, we are in considerable debt, but the nation is currently too powerful and embedded in international economics for any entity to foreclose on the United States.

I'm still reading the article, but I'm going to venture out on a limb right now and say "No." To my understanding, we are in considerable debt, but the nation is currently too powerful and embedded in international economics for any entity to foreclose on the United States.

Microsoft can do it.

Microsoft can do it.

Pure Ebil I tell you.

Microsoft can do it.

Maybe. But what would it serve? What would be accomplished? I think the answer is that the underlying economic currents would preclude the bankruptcy of a nation as economically complex as the United States (or any other developed and economically stable nation, for that matter).

Meh. The US government's debtors need the US to keep afloat. So they won't suddenly do something stupid.

They potentially could of course, but it would hurt them quite a lot as well.

One important thing to keep in mind of course is that every cent the government has to pay in interest can't be spent on something that helps people. As far as you guys are concerned, it's money going out the window.

Your comments please



Source:
http://research.stlouisfed.org/publications/review/06/07/Kotlikoff.pdf


Woohoo, Kotlikoff is my hero!!! He is the inventor of Generational Accounting, an awesome methodology to analyse the long-term sustainability of fiscal policy: a really great area where I do a lot of research....

:rolleyes:

Ok, I just realised I am a nerd. Not a computer nerd, but an economist nerd. How pathetic.

:(

Meh. The US government's debtors need the US to keep afloat. So they won't suddenly do something stupid.

They potentially could of course, but it would hurt them quite a lot as well.


See, and that is where you are wrong.

Individual investors ar atomistic and assume (rightly) that their actions will not influence policy. Therefore if an investor thinks that things might go wrong in the future, he will consider his withdrawal out of the system, as a mere minor thing.
If all investors do this (because they think that other investors might do it), they will all have a feeling they are protecting themselves properly, causing a crisis.

Another explanation is the following. If investors think that in the future things might go wrong, then they will want to be among the first to get out (and thereby cut their losses). But because all investors are able to see that something is happening, or they all build their (ir)rational fears of crisis on the same data, they will all withdraw, thereby creating a crisis.

Anyway, your point would be correct if US debt was held by a small number of large (I should say: EXTREMELY LARGE) investors, who would be taking into account the influence of their own behaviour. But this is not the case.

Maybe. But what would it serve? What would be accomplished? I think the answer is that the underlying economic currents would preclude the bankruptcy of a nation as economically complex as the United States (or any other developed and economically stable nation, for that matter).

Or maybe the fact that it is legally impossible for a nation to go bankrupt? After all, what are you going to do afterwards? Sell the nation to the highest bidder and compensate the stock- and debtholders with that? Doesnt really work, does it?

It is in the economic interests of the countries we borrow from to lend us the money.

No problem at all.

Is the United States, currently, unable to repay it's depts? If so, it is insolvent and is open to a charge of bankruptcy, there is a prevailing veiw, however, that declaring a soveriegn bankrupt is a bad precedent.

Or maybe the fact that it is legally impossible for a nation to go bankrupt? After all, what are you going to do afterwards? Sell the nation to the highest bidder and compensate the stock- and debtholders with that? Doesnt really work, does it?

No, it does not. I agree with you. I just stated a different reason along the same line of thinking.

At some point It might be a good strategic call for someone to crash the world economy in order to get control. Or it could be a preemptive strategy, i.e. you call in your debts with the USA early in order to prevent a more serious uncontrollable crash later.

Most countries dont think that long term of course.

aren't most of the investments come from china or the oil states in the middle east? they can use crisis for their own goals.

Hey, what happened to that huge surplus you guys had during all of Clinton's second term? Oh yeah. Bush.

Your comments please



Source:
http://research.stlouisfed.org/publications/review/06/07/Kotlikoff.pdf


Nope. Not till the US banking system fails to work at all.

Bankrupt is not that to understand is it?

You're bankrupt when your exchequer simply... stops... working.

See, and that is where you are wrong.
No, dude, I'm an economics student, I understand fairly well what's going on. Nonetheless, there are a few major investors, namely the governments in China, the EU and Japan to name a few. These have billions and billions in US debt.

A total collapse like the one you paint may be possible (although unlikely, a total loss of confidence in the US government's ability to service debt would have to have a pretty major reason), but the most likely doom scenario people like to paint is for foreign governments to somehow use the debt as a weapon. And I'm saying that that is virtually impossible.

But you're right, there is a level of risk involved with owing many people a lot of money.

Your comments please



Source:
http://research.stlouisfed.org/publications/review/06/07/Kotlikoff.pdf


The answer:

No.

Way, way, way too many words for me to read at this late hour.


And so, without reading the fucking "article", I'll go with no.

The US declared bankruptcy in 1971, IIRC, when Nixon snipped the last vestiges of the gold standard from the dollar. All countries which use free-floating fiat currency are, technically, bankrupt.

Hey, what happened to that huge surplus you guys had during all of Clinton's second term? Oh yeah. Bush.
It never existed, except on paper with some creative accounting efforts the likes of which would have made the Enron accountants blush.

The US declared bankruptcy in 1971, IIRC, when Nixon snipped the last vestiges of the gold standard from the dollar. All countries which use free-floating fiat currency are, technically, bankrupt.

Care to back that up?

It never existed, except on paper with some creative accounting efforts the likes of which would have made the Enron accountants blush.

Yep! That surprlus was only on paper.

Care to back that up?
There is, of course, a crucial difference between gold and Federal Reserve Notes. The government cannot create new gold at will. Gold has to be dug, in a costly process, out of the ground. But Federal Reserve Notes can be issued at will, at virtually zero cost in resources. In 1933, the United States government removed the gold restraint on its inflationary potential by shifting to fiat money: to making the paper dollar itself the standard of money, with government the monopoly supplier of dollars. It was going off the gold standard that paved the way for the mighty U.S. money and price inflation during and after World War II.

But there was still one fly in the inflationary ointment, one restraint left on the U.S. government's propensity for inflation. While the United States had gone off gold domestically, it was still pledged to redeem any paper dollars (and ultimately bank dollars) held by foreign governments in gold should they desire to do so. We were, in short, still on a restricted and aborted form of gold standard internationally. Hence, as the United States inflated the money supply and prices in the 1950s and 1960s, the dollars and dollar claims (in paper and checkbook money) piled up in the hands of European governments. After a great deal of economic finagling and political arm-twisting to induce foreign governments not to exercise their right to redeem dollars in gold, the United States, in August 1971, declared national bankruptcy by repudiating its solemn contractual obligations and "closing the gold window." It is no coincidence that this tossing off of the last vestige of gold restraint upon the governments of the world was followed by the double-digit inflation of 1973–1974, and by similar inflation in the rest of the world.
http://www.mises.org/rothbard/newliberty9.asp

What government official declared it?

It never existed, except on paper with some creative accounting efforts the likes of which would have made the Enron accountants blush.


Unless you got a reliable scource to back that up, I call bullshit.

Unless you got a reliable scource to back that up, I call bullshit.
Would you call the Financial Reports of the United States bullshit? It comes from the Treasury Department.

Game. Set. Match.

Would you call the Financial Reports of the United States bullshit? It comes from the Treasury Department.

Game. Set. Match.


So YOU say.

Lets see it.

Otherwise.....youre talking out of your ass.

Match that.

What government official declared it?
Richard Milhous Nixon, President of the United States, Commander-in-Chief of the United States Armed Forces.

What government official declared it?
Well, strictly speaking, he's got a point. Governments used to be able to ask for gold in return for their dollars (hence Fort Knox). Then the US government said that it wouldn't pay out the gold anymore...which is sorta like declaring bankruptcy. Now all you get is paper that the US government says is worth something - but that all depends now.

Obviously they didn't use that word.

Richard Milhous Nixon, President of the United States, Commander-in-Chief of the United States Armed Forces.

Can I see where he said it or implied it?

So YOU say.

Lets see it.

Otherwise.....youre talking out of your ass.

Match that.
No problem.

http://fms.treas.gov/annualreport/annrpt99.pdf

http://fms.treas.gov/annualreport/annrpt00.pdf

Enjoy.

Well, strictly speaking, he's got a point. Governments used to be able to ask for gold in return for their dollars (hence Fort Knox). Then the US government said that it wouldn't pay out the gold anymore...which is sorta like declaring bankruptcy. Now all you get is paper that the US government says is worth something - but that all depends now.

Obviously they didn't use that word.

Ok, you have a point but still...refusing to pay out the gold does not mean that the US declared bankruptcy.

Can I see where he said it or implied it?
http://www.mises.org/money/4s7.asp

No problem.

http://fms.treas.gov/annualreport/annrpt99.pdf

http://fms.treas.gov/annualreport/annrpt00.pdf

Enjoy.



Clever.

Post the entire report and expect anyone to make heads or tails of it, AND expect them to find the specific part that MAY refer to your point.

Nice try.

I think your full of it.

Ok, you have a point but still...refusing to pay out the gold does not mean that the US declared bankruptcy.
Sure it does. It means the US didn't have enough to cover its debts, and said "Ok, we're just going to issue dollars backed by nothing other than what it says on the notes: 'full faith and credit'".

Granted, this is going off the original topic some, but honestly, the US was bankrupt long before the article posted about says.

Ok, you have a point but still...refusing to pay out the gold does not mean that the US declared bankruptcy.
Well, as Rothbeard said, they had a contractual obligation. People (and even moreso the system itself) demanded that the money they got from the government were vouchers for something independently valuable.

The US government went back on that contractual obligation. Call it whatever you want, but if you look at the details of how the world moved away from the Gold Standard, many things look decidedly fishy along the way.

Clever.

Post the entire report and expect anyone to make heads or tails of it, AND expect them to find the specific part that MAY refer to your point.

Nice try.

I think your full of it.
I think you don't want to do the research. Not. My. Fucking. Problem.

Why are you so against there not being a surplus? I'm just curious about that.

Sure it does. It means the US didn't have enough to cover its debts, and said "Ok, we're just going to issue dollars backed by nothing other than what it says on the notes: 'full faith and credit'".

That's like saying I'm shreading my credit cards even though I still have money in the bank to pay it off.

Granted, this is going off the original topic some, but honestly, the US was bankrupt long before the article posted about says.


Thanks FDR.

That's like saying I'm shreading my credit cards even though I still have money in the bank to pay it off.
No, because a credit card is different from money itself. You have money to pay what you received on credit. The "money" of the US (and indeed--any country not on the gold standard) is simply credit. That's it. It's backed by nothing but a vague promise which will never be kept.

Meh. The US government's debtors need the US to keep afloat. So they won't suddenly do something stupid.

They potentially could of course, but it would hurt them quite a lot as well.

One important thing to keep in mind of course is that every cent the government has to pay in interest can't be spent on something that helps people. As far as you guys are concerned, it's money going out the window.

A lot of Western governments are in debt, and over the past decade, a substantial number of their citizens have an enormous amount of unsupported private debt.

Without even looking at government debt, look at credit card debt. Unsecured debt is so large in the UK at this point, that it is already known that they can't afford to make payments on the interest (read that when I was in London this spring). Credit cards used to be less popular outside the US, but there's been an explosion over the past few years.

I think you don't want to do the research. Not. My. Fucking. Problem.

Why are you so against there not being a surplus? I'm just curious about that.


Well, other than the fact that you are the only person who claims there wasnt one, when its pretty much accepted as fact by anyone worth listening to, that there was one.

As for research, your tactic is the same as anyone who asserts that some hard to follow document proves thier point of arguement, and yet does not quote the specific or pertinent information.
It doesnt prove anything, and makes you look desperate.

Wether or not there was a budget surplus, how does that affect Bushes decision to refund that money, by mailing checks to everyone?
Or perhaps you forgot he did that?
If there was no actual budget surplus, then where did the 300$ he sent to every taxpayer come from?

Well, other than the fact that you are the only person who claims there wasnt one,
There are a number of people who know there wasn't one, including people in the US Congress.

So your appeal to numbers fallacy has been noted.


Wether or not there was a budget surplus, how does that affect Bushes decision to refund that money, by mailing checks to everyone?
It doesn't. But perhaps you've forgotten that said money is not the government's, but those persons'.


Or perhaps you forgot he did that?
If there was no actual budget surplus, then where did the 300$ he sent to every taxpayer come from?
I never received said money. And the money which was sent was created by the Federal Reserve. That's how things are done in the US. Might help if you actually knew a little bit about it, ok? I'm not trying to be mean here; you just don't know what goes on.

They're borrowing money off the communists (China) they must be brooke!.....wonder why that is?

They're borrowing money off the communists (China) they must be brooke!.....wonder why that is?
You're not "broke" if you're still making your payments.

If borrowing money means you're "broke" then the whole world is "broke".

You're not "broke" if you're still making your payments.

If borrowing money means you're "broke" then the whole world is "broke".
Shhh! Your ruining my post!

Or maybe the fact that it is legally impossible for a nation to go bankrupt? After all, what are you going to do afterwards? Sell the nation to the highest bidder and compensate the stock- and debtholders with that? Doesnt really work, does it?
I haven't read through the entire thread, so someone might have made this point, but that's more or less what happened to Mexico when it defaulted on its debts to several European countries. Led by France, they got together, found an unemployed Austrian prince, put a few French divisions on ships, and took over the country during the 1860s. It didn't turn out terribly well in the end, but there is precedent for it.

Wether or not there was a budget surplus, how does that affect Bushes decision to refund that money, by mailing checks to everyone?
Or perhaps you forgot he did that?
If there was no actual budget surplus, then where did the 300$ he sent to every taxpayer come from?

And what mythical checks are you talking about? You keep asking for specific sources. Provide one for this.

I got as far as "stripped bear" and I stopped reading, as I'm against the exploitation of animals to make economic points.

Bankruptcy is a cessation of cashflow, rather than accumulation of debt. You could have a stack of cash somewhere, but for some reason be unable to make any payments for a month, and if your creditors are contractually entitled to their money now, and you are unable to obtain a loan or be granted an extension, then you are fucked.

National governments get around this problem by constantly circulating credit notes. Ultimately they make their own rules. They can fall into massive debt, but they can never become bankrupt so long as someone is willing to loan them money, or purchase some financial product that acts as a loan.

Bankruptcy is a cessation of cashflow, rather than accumulation of debt. You could have a stack of cash somewhere, but for some reason be unable to make any payments for a month, and if your creditors are contractually entitled to their money now, and you are unable to obtain a loan or be granted an extension, then you are fucked.

National governments get around this problem by constantly circulating credit notes. Ultimately they make their own rules. They can fall into massive debt, but they can never become bankrupt so long as someone is willing to loan them money, or purchase some financial product that acts as a loan.


Considering the size of the money borrowed by most nations, it's not those nations who are borrowing who have the problem. It's whoever lent the money.

IIRC, the "budget surpluses" were merely annual surpluses where the government happened to take in more money than it spent. The national debt--the accumulation of half a century of annual budget deficits--was still there. It was something like $4 or $5 trillion in '96, and I think it's now up to $7 trillion.

The fact that there's an outstanding national debt is not the Republicans' fault--a few billion per year over the last 12 years wouldn't begin to eradicate the debt as it stood in '96.

The fact that the national debt has skyrocketed to about $7 trillion in the past ten years, on the other hand . . .

Any government with control over the money supply via a central banking system (as the U.S. does) cannot go bankrupt. These governments have the power to influence inflation. They can just inflate their way out of debt by making the currency worth less through printing tons of it. Inflation is the debtor's friend, especially when interest rates on the debt are fixed as with most Treasuries - the U.S.'s primary debt instrument. In this sense, the debtor pays the debt back with money that is worth less than what was lent. This is why inflation fears can roil bond markets so much.

The dollar may be worth squat, but the government cannot go bankrupt.

If we want to implicate political parties in creating and contributing to the national debt, both look pretty bad. There may be a few, and I mean few, politicians in each party who genuinely want to do what it takes to reduce this, most only pay lip service to this.

Didn't Germany default on its WW1 reparations payments during the Depression? My memory's kind of vague--any economic historians care to remind me what happened there?

Considering the size of the money borrowed by most nations, it's not those nations who are borrowing who have the problem. It's whoever lent the money.
It depends on the size. The Third World is fucked because it didn't borrow enough.

To paraphrase some guy somewhere, "If you owe us a billion dollars, you have a problem. If you owe us one hundred billion dollars, we have a problem."

Maybe it's time the debt spiral got slowed, perhaps even (gasp!) net repayments began.

The dollar may be worth squat, but the government cannot go bankrupt.

Correct. Of course, it raises the question of whether the benefits of deficit spending are worth debasing the dollar...

The debt is also made manageable by the fact that real US GDP is growing faster than the US government's deficits further reduce the possibility of the US going bankrupt; our strong GDP not only reduces the level of outstanding debt relative to our income but also results in higher real interest rates, making it easier for the government to finance the debt through the sale of bonds.

A similar mechanism is at work with the US current account deficit in general; an $800 billion dollar current account deficit may seem serious, but we have to take in to account that the world economy is adding $2.5 trillion in GDP per year at its current growth rate. That's one of the main reasons why the dollar has not depreciated seriously despite the large deficits.

The problem also get worst as you look at the futur. The average population getting older in time, we can expect in few years when baby boomers will retired that a small portion of the population will have to support the biggest part.

With the rarity we start to see on some ressources. We're gonna have to accept a huge step back in our way of life.

With the rarity we start to see on some ressources. We're gonna have to accept a huge step back in our way of life.

Possibly. However, I think a lot of places will be well prepared for the future so it will not be the same everywhere; the amount of resources we actually use compared to the amount we waste is incredible. For example, only 4% of world oil production is used to make all of the plastics in the entire world; 65% of it is used in cars and light trucks, not even for industrial or agricultural purposes. We can conserve and recycle a lot of the raw materials we use without even impacting the physical production of goods and services.

Or maybe the fact that it is legally impossible for a nation to go bankrupt? After all, what are you going to do afterwards? Sell the nation to the highest bidder and compensate the stock- and debtholders with that? Doesnt really work, does it?Actually, that's precisely what to do.

In fact, one way to save a bankrupt economy is by allowing foreign investors to buy you out--indeed, the article suggests that the United States would be much better off if we were not so paranoid about Chinese investments, since China is the only country likely to be capable of serious investment in the U.S.

Hey, what happened to that huge surplus you guys had during all of Clinton's second term? Oh yeah. Bush.Yes, Bush's policies are even worse than Clinton's.

But it is equally important to realize that the Clinton surplus was, for the purposes of analyzing longterm fiscal solvency, essentially an illusion of accounting.

Ok, you have a point but still...refusing to pay out the gold does not mean that the US declared bankruptcy.Actually, it does.

Bankruptcy, strictly speaking, is a reorganization of debt so that you wind up paying your creditors less than you originally promised.

Inflation always results in paying creditors less than you promised in real terms--since the sum that you repay is not worth as much as the sum that you borrowed.

The United States, unable to pay its debts on their original terms--namely, gold--insisted that its creditors allow it to pay in inflating dollars. Its creditors agreed, in part, only because the United States was able to convince them that we would not allow the dollar to inflate too much--which, to a certain extent, is true.

Still, the fact of the matter is that the United States intentionally reorganized the terms of repayment so as to pay back less than we originally promised. In a technical sense, this was a bankruptcy proceeding.

May I respectfully suggest that people actually read the article posted by the OP?

I am not a professional economist, but I found it (on the whole) very readable... and it directly answers many of the propositions made above. It explains, for instance, why increasing productivity does not solve the problem.

It's really though, when you think about it, whether leaving behind the gold standard was bankruptcy.

If we use AnarchyeL's working definition of bankruptcy, "a reorganization of debt so that you wind up paying your creditors less than you originally promised", that's not necessarily what the U.S. did here. They did not re-negotiate the principle or the interest coupon.

If we use Tactical Grace's cash flow definition, that's not really what happened here either. The government did not have a cash flow problem - there was plenty of currency around, and there was by no means a run on the gold that backed up that currency. There was no default.

(I'm not disagreeing with their definitions, just applying them to what the U.S. did with regard to the gold standard).

What the government did is something that never happens in a bankruptcy proceeding. They changed the currency. More than that - they changed the basis for the existing currency.

Previuosly, a note (dollar) could be exchanged for it's value in gold via the treasury. The government said that they will not do this anymore. Since the debt was actually bought in dollars and to be repaid in dollars, then there was no default. However, there was no longer the option to convert that debt into gold.

Was this bankruptcy? Not by the common definitions we usually think of when someone files chapter 7. Is this a new, different, governmental form of bankruptcy? *shruggs shoulders*.

Either way, the U.S. government did change the terms of the currency, so I don't think the bankruptcy comparison is far-fetched, at minimum.

Any government with control over the money supply via a central banking system (as the U.S. does) cannot go bankrupt. These governments have the power to influence inflation. They can just inflate their way out of debt by making the currency worth less through printing tons of it. Inflation is the debtor's friend, especially when interest rates on the debt are fixed as with most Treasuries - the U.S.'s primary debt instrument. In this sense, the debtor pays the debt back with money that is worth less than what was lent. This is why inflation fears can roil bond markets so much.

The dollar may be worth squat, but the government cannot go bankrupt.
When you promise to allow redemption in gold, but then default on that by going off the gold standard, you've tacitly admitted bankruptcy. That's what the US did.

No problem.

http://fms.treas.gov/annualreport/annrpt99.pdf

http://fms.treas.gov/annualreport/annrpt00.pdf

Enjoy.
According to page 9 in each of those documents, there was a $69 Billion surplus in 1998, a $124 Billion surplus in 1999 and a $236 Billion surplus in 2000. That's a pretty fucking big surplus, which Bush squandered the minute he got his hands on it.

I think you don't want to do the research. Not. My. Fucking. Problem.

Why are you so against there not being a surplus? I'm just curious about that.
Because every time you have a deficit, the debt goes up, and the higher your debt, the more interest you pay, and that is basically money going into a black hole that could have been spent on much more useful things, or be returned to you in a tax cut. The debt is at something like $8 trillion right now. Even at an interest rate of only 3%, that's $240 billion per year. In other words, you could give a tax cut of about $1500 to every american taxpayer each year if there were no debt. Had Bush not squandered the surplus Clinton had created, the debt would have been gone within 25 years. Instead, he's added several trillion dollars to it already, and its valye when he came into office will be nearly, or possibly even more than doubled by the time he leaves office. Basically, President Bush's poor fiscal policies are going to cost the average American taxpayer an additional $1000 per year of money going into a black hole by the time he leaves.

According to page 9 in each of those documents, there was a $69 Billion surplus in 1998, a $124 Billion surplus in 1999 and a $236 Billion surplus in 2000. That's a pretty fucking big surplus, which Bush squandered the minute he got his hands on it.

A lot of that money came from the stock market rally and Nasdaq bubble and disappeared when the recession started in early 2001. The projections of surpluses were made with the expectation that there would be no recession and the stock markets would perform as well as they did in the late 90's. The projections were badly flawed and ridiculously unrealistic; ironically, it was those projections of giant surpluses that were used to justify the 2001 tax cut.

There would have been deficits regardless of the tax cuts. However, the blame lies far more with additional spending than the cut taxes; spending has simply outgrown the rate of revenue growth, and that will produce deficits no matter what the tax rate is and no matter whether we raise it or not. The budget was balanced in the 90's because President Clinton and the Republican congress restrained spending, not because of raising taxes.

It is in the economic interests of the countries we borrow from to lend us the money.

No problem at all.
I need to start taking lessons from my government in borrowing money.

"Give me $30. It is in your best interest."

I need to start taking lessons from my government in borrowing money.

"Give me $30. It is in your best interest."

Then I shall lend you money the way the US Gov't borrows: I'll lend you $30, you pay me back $10 every month to cover the interest until you pay back the principal. But you don't pay me the principle! By the end of two years, I've collected $240 from you, and will keep collecting because you never paid me back the original $30, just interest! MWAHAHAHA

I need to start taking lessons from my government in borrowing money.

"Give me $30. It is in your best interest."

Ironically, it is in their best interests. If the US goes down, everyone goes down...of course, the returns our bonds generate are quite nice as well. Guaranteed stability and 5% interest are an incredible deal for governments wanting to dispose of their surplus in a safe and profitable reserve.

Then I shall lend you money the way the US Gov't borrows: I'll lend you $30, you pay me back $10 every month to cover the interest until you pay back the principal. But you don't pay me the principle! By the end of two years, I've collected $240 from you, and will keep collecting because you never paid me back the original $30, just interest! MWAHAHAHA
No, no. I need to borrow like the US Gov't. You have to lend like you don't know what you're doing.

According to page 9 in each of those documents, there was a $69 Billion surplus in 1998, a $124 Billion surplus in 1999 and a $236 Billion surplus in 2000. That's a pretty fucking big surplus, which Bush squandered the minute he got his hands on it.What BAAWA is getting at, without being very direct about it, is that for the purposes of analyzing longterm fiscal solvency, the surplus had more to do with what we "count" as "debt" than with any real success at managing our finances.

To calculate fiscal solvency, you have to deal with projected revenue and total expenditures in the long-haul... and as it turns out, even during Clinton's term--and according to his own administration's accounting--the difference between what the United States has to spend and what it takes in is on the order of tens of trillions of dollars.

Certainly having a yearly surplus is a good thing, all things being equal--it means we can spend some money actually paying off our debt. But even if we had the same surplus for the next ninety years, the United States would still be in serious fiscal trouble down the road.

Read the article in the OP... It makes a lot of sense. Mathematically, there was no "real" surplus--we were still losing more ground than we were gaining. It only "looked" like a surplus because of how we decided to look at things.

Again, though... much MUCH better than under Bush, with whom we lost even what little ground we had managed to gain.

No, no. I need to borrow like the US Gov't. You have to lend like you don't know what you're doing.

Oh, I think they know what they're doing... Ahem: "Yes, Desperate Measures, you can borrow $30. Please don't bomb us. My wife and son have brown skin, yes... Yes, I'll take continual interest payments. Please take my money. No, you don't ever have to pay back the principal."

EDIT: Yes, I am a white person and my wife and son really are brown persons. But that's another post for another day.

Morally, perhaps.

Monetarily, no way, not yet.

Hey, what happened to that huge surplus you guys had during all of Clinton's second term? Oh yeah. Bush.

Even though I'm far more democrat than republican it is worth pointing out that a surplus means no defecit.

Even during the boom economy in Clinton's best years, there was still a shit ton of DEBT.

Well, looking at page nine of one of the two reports posted...

It says they had a surplus of 124,366 billion dollars.

Eat that.

Oh, I think they know what they're doing... Ahem: "Yes, Desperate Measures, you can borrow $30. Please don't bomb us. My wife and son have brown skin, yes... Yes, I'll take continual interest payments. Please take my money. No, you don't ever have to pay back the principal."

EDIT: Yes, I am a white person and my wife and son really are brown persons. But that's another post for another day.
Ah! So, I need bombs.

Damn it.

I have no bombs.

Ah! So, I need bombs.

Damn it.

I have no bombs.

I'll sell you the bombs with which I hope you do not blow up me and my family. I only ask for vaccines and medicine in return.

I'll sell you the bombs with which I hope you do not blow up me and my family. I only ask for vaccines and medicine in return.
Does Advil work?

Does Advil work?

It does, but it hurts our stomach if we take it without food. And we have no food. Do you have Tylenol? Or some chicken soup?

It does, but it hurts our stomach if we take it without food. And we have no food. Do you have Tylenol? Or some chicken soup?
You can eat cake if you are hungry.
(How am I doing?)

Well, looking at page nine of one of the two reports posted...

It says they had a surplus of 124,366 billion dollars.

Eat that.
That was (obviously) a typo, it should have said million at the top there.

Even though I'm far more democrat than republican it is worth pointing out that a surplus means no defecit.

Even during the boom economy in Clinton's best years, there was still a shit ton of DEBT.
What, you expect a president to just be able to erase $4 trillion of debt that already existed when he came into office? And you expect him to be able to turn around a gigantic deficit into a surplus with the snap of a finger (although I do admit, Bush seems to be quite adept at doing the opposite)? Clinton worked his ass off to turn the huge deficit left by Reagan/GHW Bush into a surplus, and was able to to it by his second term. That's definitely worth something. Bush squandered the surplus Clinton worked so hard for and hundreds of billions more within his first year.

You can eat cake if you are hungry.
(How am I doing?)

But with our economy, I can buy 30,000 cakes for the $30 you wanted to borrow in the first place. I don't know if I should lend money to the U.S. anymore.
(Doin' fine.)

What, you expect a president to just be able to erase $4 trillion of debt that already existed when he came into office? And you expect him to be able to turn around a gigantic deficit into a surplus with the snap of a finger (although I do admit, Bush seems to be quite adept at doing the opposite)? Clinton worked his ass off to turn the huge deficit left by Reagan/GHW Bush into a surplus, and was able to to it by his second term. That's definitely worth something. Bush squandered the surplus Clinton worked so hard for and hundreds of billions more within his first year.

That surplus was as good as gone on March 10th of 2000; of course, you have to remember that the justification for the 2001 tax cut was the large surpluses projected in 1999 and 2000. If the stock market had followed the path predicted by those reports, we would not be running deficits on the scale we are today even with the tax cuts and reckless spending of the Congress since Bush took office.

Bush is a wasteful spender, and that's the main reason why we have a deficit rather than a surplus.

Bush is a wasteful spender, and that's the main reason why we have a deficit rather than a surplus.
I'm not disagreeing.

According to page 9 in each of those documents, there was a $69 Billion surplus in 1998, a $124 Billion surplus in 1999 and a $236 Billion surplus in 2000. That's a pretty fucking big surplus, which Bush squandered the minute he got his hands on it.
If you read the footnotes, you find that the "surplus" was from adding in the Social Security fund, which shouldn't be done because those are for payments anyway. It's an accounting trick. Enron did the same thing, but the US Government won't indict itself.

I'm not disagreeing.

But at the same time, Bush didn't destroy a surplus because it didn't exist in reality. The main credit that Clinton deserves was his reduction of the deficits in the 1993-1995 period because those were directly the product of his tax and economic policies rather than just a buoyant stock market.

If you read the footnotes, you find that the "surplus" was from adding in the Social Security fund, which shouldn't be done because those are for payments anyway. It's an accounting trick. Enron did the same thing, but the US Government won't indict itself.No, it's more than that.

The problem is that the budget is an unscientific, empirically meaningless measure of the fiscal solvency of a government.

The poorest country in the world can manage to balance a budget. That doesn't mean it isn't on the brink of disaster.

But with our economy, I can buy 30,000 cakes for the $30 you wanted to borrow in the first place. I don't know if I should lend money to the U.S. anymore.
(Doin' fine.)
I'll KILL you! With this secret... uh... thing... I'm developing... in the... um... in my basement.

Hey, what happened to that huge surplus you guys had during all of Clinton's second term? Oh yeah. Bush.
There was no actual surplus, rather it was a predicted surplus based on projections from the height of the dot-com bubble. As the bubble popped right before Clinton left office, Bush had nothing to do with the surplus going away.