With former President Bill Clinton making headlines earlier this week after his successful trip to North Korea, I figured this would be a good time to write a retraction of some previous statements I published about the Clinton Presidency.
This March, I did a post entitled "I Miss Bill Clinton" which listed 6 ways he was a better President than either George W. Bush or Barack Obama. The first reason I listed was Bill Clinton's budget surpluses. Recently, a commentator brought it to my attention that these surpluses were not real surpluses, but more or less accounting fraud.
The commentator linked to an article by the Ludwig von Mises Institute entitled "The Surplus Hoax" to substantiate this claim:
Imagine a corporation suffering losses and being deep in debt. In order to boost its stock prices and the bonuses of its officers, the corporation quietly borrows funds in the bond market and uses them not only to cover its losses but also to retire some corporate stock and thereby bid up its price. And imagine the management boasting of profits and surpluses. But that's what the Clinton Administration has been doing with alacrity and brazenness. It suffers sizeable budget deficits, increasing the national debt by hundreds of billions of dollars, but uses trust funds to meet expenditures and then boasts of surpluses which excites the spending predilection of politicians in both parties...
The surplus deception is clearly discernible in the statistics of national debt. While the spenders are boasting about surpluses, the national debt is rising year after year. In 1998, the first year of the legerdemain surplus, it rose from $5.413 trillion to $5.526 trillion, due to a deficit of $112.9 billion. Since then it has risen to $5.643 trillion today, October 15, 2000, with another deficit of $117 billion.
Do read the entire article for more in-depth analysis of what happened in the 90's to create the illusion of budget surpluses. As it turns out, Clinton's fake surpluses may have been more harmful than typical deficits because we were under the illusion that everything was in order.
That set the stage for the suicidal deficits of the Bush-Obama era as Washington politicians salivated over ways to spend all that "surplus" money that Washington had collected. It turns out I was really wrong about Clinton's "surpluses" and I am very glad that this commentator corrected me.