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Wednesday, October 13, 2004

The Debates: a Twice-Repeated Lie

In the debate tonight, Senator Kerry continued the lying about the national debt that was first voiced by President Clinton.

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Granted, it was not a major point in the debates, but Senator Kerry, in touting Democratic accomplishments under President Clinton, twice said that Clinton had paid down the national debt.

Go to the United States Treasury’s own website (http://www.publicdebt.treas.gov/opd/opdhisto4.htm) and you will see that at no time during the Clinton Presidency did the outstanding debt of the Federal government ever go down.  In fact, during President Clinton’s last four years, the total Federal debt rose from $5.225 trillion to $5.674 trillion.

What was going on was a sleight-of-hand shell game.  The Treasury took all temporary surplus tax funds coming into the Social Security system accounts and immediately spent a portion of them on other government programs in order to keep those expenditures from counting against the Federal deficit.  The remaining excess funds in the Social Security accounts were used to buy publicly-held Federal debt.

To replace those funds diverted from Social Security to other government programs, the Treasury issued new, non-marketable debt and put it into the Social Security fund accounts.

The net result was that the increase in the total Federal debt never slowed down, but the increase occurred in non-marketable debt held in the Social Security account.

To understand this better, think of it this way.  If you had high credit card debt, you could pay down part of it by taking a second mortgage loan on your home.  To say that you had paid down your debt would be a flat lie.  You merely substituted a home mortgage loan for your credit card debt.  In the same way, President Clinton borrowed from the Social Security system to repurchase some of the debt held by the public.

Posted by Thomas E. Brewton on 10/13 at 11:25 PM
Economics • (0) Comments
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