National Debt Hasn't Declined
November 13, 2000
Earlier this year, the National Debt Clock, not far from Times Square in Manhattan, was taken down. Erected in 1989, it reported the growth of the debt from $2.8 trillion to $5.7 trillion when it stopped -- $73,733 per family. The increase began slowing dramatically, however, in 1998, and earlier this year started running backward as the debt declined. President Clinton announced the debt had been reduced by $360 billion over the last three years -- $223 billion over the last year.
However, the debt clock may have been taken down prematurely.
According to the Bureau of the Public Debt, the total public debt at the end of fiscal 2000 was about $5.7 trillion, up $261 billion over the same three-year period during which President Clinton claimed it fell by $360 billion.
A closer look at government data shows the national debt is still rising. The explanation lies in the murkiness of government accounting.
- When the Social Security program runs a surplus -- as it has since 1983 -- until recently the surplus was traded for special U.S. securities and the actual money was spent on other government activities.
- Now, with Social Security and the rest of the government running a surplus, cash has been used to redeem marketable federal debt held by investors.
- Over the last three fiscal years, debt held by the public has declined $385 billion, but the government's internal debt (various trust funds, including Social Security), has increased about $645 billion.
- Of that amount, about $158 billion is accrued interest that appears in the Social Security trust fund in the form of new Treasury obligations.
The result? Government debt increased $261 billion. In a period of surplus, government debt may not decline, but who owns the debt can change fast.
Source: Scott Burns, "Winding Up the National Debt Clock," Dallas Morning News, November 12, 2000.
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