The debt ceiling crisis and the myth of the Clinton surplus

Whether he meant to do so or not, President Obama has tossed the myth of the Clinton “surplus” under the bus.

About a dozen years ago, the Clinton administration claimed its government finances were in a surplus for the first time anyone could remember. However, the only way one could make sense of the claim was by assuming that debt owed to the Social Security trust fund was not really debt. The media, predictably, bought into the claim and the assumption. However, the fact was that it was the Social Security trust fund that had the surplus. The rest of the government continued to bleed red ink, just as in previous administrations.

Fast forward to this year.

The treasury is now very close to reaching the statutory debt ceiling, and President Obama is eager to cut a deal that will enable him not to deal with the issue again until well after the 2012 elections. To make his case to the nation, he is threatening the nation’s retirees. Without a debt ceiling increase, he claims, the government may not be able to send out Social Security checks next month.

So now, it would seem, the money owed to the Social Security trust fund is really debt after all. Otherwise, retirees would have nothing to worry about. The implication of the threat, of course, is that the Clinton “surplus” was merely a pleasant fiction.