Btw, if you all recall how I was discussing that the surplus is actually increasing the national debt, rather than reducing it. Well, Martin Gross wrote a commentary piece in the Washington Times today that confirms what I was trying to relate:
washtimes.com
Paying down the debt as it goes up?
Martin L. Gross
Second of three articles
We incessantly hear, in loud bravado from Al Gore, and in more muted tones from the opposition, that Washington is so healthy financially we're regularly paying down the once-escalating national debt.
Vice President Gore recently roared that the debt will be gone, finished, paid off, finito, by 2012, just a whiff of time in fiscal measurement. In September, from his Rose Garden perch, President Clinton boasted that hundreds of billions have been erased from the national debt just this year. This is supposedly the third year in a row we have been paying down the massive albatross, one that lies heavily over our financial heads to the tune of $84,000 for every family of four.
Is the paydown all true? Of course not. This is merely another chapter in the newly minted mathematical hyperbole that has infected the body politic.
As political lies fly like leaves in a windy autumn, there is, however, one stalwart outpost of truth in Washington. It is the Bureau of the Public Debt, a division of the Treasury Department. But why would they tell us victimized citizens the truth? Why such contrarian thought?
The answer is that they, not the politicians, control the numbers that influence international finance, the stock market, and the central bankers here and abroad. if they lied, our currency would be damaged, our good faith and credit so much verbiage. Politicians can and do lie regularly, but somewhere, sometime, the buck must stop. It is at the Bureau of the Public Debt.
What do they say? I can give you an inside view because I deal with them regularly. On the forth workday of the month, the BPD issues the latest true numbers on the national debt on a single sheet that any citizen can obtain by calling them. Or you can check it out on the Web at publicdebt.treas.gov.
You'll be surprised by the truth.
In 1998, the administration crowed it had a surplus of $70 billion and was paying down the debt. I called the Bureau and asked if that was correct. They said they couldn't get involved in politics, but . . . .
"In 1998, we had a negative $113 billion for that year. The national debt went up (emphasis mine) $113 billion. from $5.413 trillion to $5.53 trillion."
What about 1999, an even grander year, when the administration announced there was a surplus of $123 billion?
Again, I called and received a copy of the 1999 national debt, covering the end of the fiscal year, Sept. 30, 1999.
Did the national debt go down as promised?
Apparently, it went in the only direction it seems destined for.
It rose to $5.656 trillion, an increase of $130 billion. Some paydown.
Fiscal 2000 ostensibly set the record in surpluses, some $237 billion. But once again, the national debt went up. Not an enormous amount in Washington terms, just some dozen billion, but up nevertheless.
What about the future? Now, this is classic. The president's own 2001 budget has a chart showing the projected future of the national debt. According to the administration itself, it will reach $6.8 trillion by 2012, the year Vice President Gore says it will be fully paid off.
What's going on here? What's the gimmick that allows them to fool me and thee?
It's a simple case of two sets of books. The national debt is split into two parts, the "external" debt consisting of bonds held outside, from simple folks to giant financial institutions from Manhattan to Tokyo. This is called the "marketable" debt.
The second part is the "internal," non-marketable debt which holds bonds representing the people's money — excess trust fund taxes, mainly from Social Security. It is a kind of second income tax and makes up 80 percent of the so-called "surplus." That money has been spent by the government in the general fund, then deposited as IOUs. Both debts, external and internal, carry approximately the same interest, averaging about 6 percent.
Over the last few years, the marketable debt is being paid down, a few percent at a time. But the money to pay it down comes from a raid on the trust funds. That internal debt, which someday will have to be redeemed, has meanwhile gone up almost twice as much as the external one has come down.
It's a two-card Monty game in which the money is just shifted from one Beltway pocket to another.
The purveyors of this gimmick say paying off the outside debt is more important. Supposedly it is going to save us interest. Nonsense. The internal debt alone will cost us extra interest of some $240 billion a year by 2012, money that has to come out of the annual budget —and just enough to kill any grandiose spending.
The reduction in the marketable debt was supposed to accomplish the miracle of lower interest rates. However, it turns out the Treasury is a relatively small player in the daily traffic in government bonds. The result? While we've been paying down the marketable debt (while the other half has gone up more), the interest rate has not gone down. Instead, it has gone up, from 4.5 to some 6 percent.
It is easy to fool the public with fancy, false math. Some politicians are honest, but being totally ignorant of Beltway numbers, they merely ape their party's words. Others are clued into the truth but have decided to lie to the voters, confident they'll never be tripped up.
The subterfuge is shameful, but it's only the beginning.
Anyone for a $10 trillion national debt?
Martin L. Gross is the author of three New York Times best sellers on the federal government. His latest is "Government Racket 2000: All New Washington Waste From A to Z," an original paperback published by Harper Collins. |
