Reply To: Clinton's Budget Surplus?


That off budget surplus data is interesting, as I wasn’t aware that such a category existed. I knew about the social security tax increase under Reagan, but I didn’t realize that Social Security had been in deficit. I find it interesting that the off budged surplus increased until it peaked at $186 billion in 2006, but has been decreasing every since and is estimated to go back into a deficit around 2016. Is there any particular reason why it peaked in 2006? I have heard of the controversy of whether or not Social Security is in the red, will be in the red, or as some claim, is perfectly fine. Does Table 1.1 prove that it is indeed in trouble?

How much of the off budget surplus did Clinton use to offset the on budget deficit?

Looking at the Table 1.1 Total Receipts and Outlays, I couldn’t help but wonder if inflation, credit expansion, and the tech bubble contributed to Clinton’s surplus in addition to higher higher tax rates. It seems somewhat plausible to me that as the economy was being artificially pushed higher and higher by inflation coupled with higher tax rates, the total receipts would increase, but when the bubble finally pops, receipts would decrease due to less taxes from lower incomes, corporate revenue, asset values, capital gains, ect. But because government spending continually increased the budget surplus vanished. If this explanation was the case, wouldn’t partial credit go to the federal reserve for the surplus instead of Clinton being a thrifty, fiscally conservative president?

But i’m probably aggregating too much, and making an over simplification of a highly complex event without fully understanding everything else that happened in that time period.