Clinton's Double-Counting Budget
March 4, 1999
Critics charge President Clinton is double counting in his proposed budget. The administration's accounting is confusing, and the numbers cited have changed since his State of the Union address. However, economists say it amounts to spending more money than the government expects to have.
- Of the $4.5 trillion surplus Clinton projects over the next 15 years, $2.3 trillion is from payroll taxes already earmarked for Social Security -- leaving a real surplus of only $2.2 trillion.
- He proposes adding $2.8 trillion of the surplus to Social Security -- although this is $600 billion more than the projected non-Social Security part of the surplus.
- Of this $2.8 trillion, $2.1 trillion would go into the Social Security trust fund and $700 billion would be invested in private-sector equity markets.
- Yet the White House is also asking for another $1.7 trillion -- $700 billion for the Medicare trust fund, $500 billion for USA retirement accounts and $500 billion for new domestic and defense spending.
- This brings Clinton's overdraft to $2.3 trillion.
Clinton claims his proposal would extend the life of the Social Security trust fund from its current estimated bankruptcy date of 2032 to 2055. He does so by crediting to Social Security the additional interest accumulated by the trust fund on the $2.1 trillion cited above and returns on equity market investments over the next 56 years. He estimates this will total $29.9 trillion or $9.9 trillion in constant 1999 dollars. But even if this interest materializes, and is not spent on other federal programs, it is still far short of meeting the Social Security trustees' estimate of a negative trust fund balance of $61.1 trillion in 2055.
Source: J.T. Young (U.S. Senate Republican Policy Committee), "Double-Counting for Dummies," Investor's Business Daily, March 2, 1999.
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