A NewsBusters article about misstatements made by former President Bill Clinton on "Meet the Press" sparked a fact-checking examination by the St. Petersburg Times' PolitiFact.
As reported Sunday, Clinton bragged to host David Gregory that his administration had "paid down the debt for four years, paid down $600 billion on the national debt."
This of course was quite incorrect as the debt didn't decline one year while Clinton was in the White House and actually increased by $394 billion in the four years in question.
PolitiFact staff writer Lou Jacobson contacted a number folks on this issue including me to reach what I consider a "politically correct" conclusion:
It depends on what the definition of "national debt" is. [...]
There are actually a few ways of tabulating the debt. One is public debt, which includes all debt borrowed by the federal government and held by investors through Treasury notes and other securities. Another is gross federal debt, which includes public debt plus debt held by the government. The most notable forms of debt held by the government are the trust funds for Social Security and Medicare, money which is owed to beneficiaries in the future.
The Office of Management and Budget estimates that the public debt will reach $9.3 trillion by the end of fiscal year 2010. Add in the $4.5 trillion in debt held by the government, and you come up with a gross federal debt of $13.8 trillion.
Now let's look at Clinton's tenure. Using the public debt figures, we see that the debt rose year by year during the first four fiscal years of Clinton's stewardship, then fell during each of the following four fiscal years, from a 1997 peak to a 2001 trough.
So using this measurement, Clinton is correct that "we paid down the debt for four years," though he did overestimate the amount that was paid down when he said it was $600 billion. The actual amount was $452 billion -- which was equal to about 12 percent of the existing public debt in 1997.
But what about gross federal debt? On this score, NewsBusters is correct: In each fiscal year from 1993 to 2001, the gross federal debt increased, because the increase in money in government trust funds exceeded the annual decreases in the federal budget deficit.
So by one of these measures, Clinton is correct, and by another, he's wrong.
After citing a number of economists on either side of the aisle, PF quoted one of my e-mail messages concerning the subject:
"If the public debt during those years was bought with other debt -- meaning by the Social Security trust and the Federal Reserve -- we didn't actually pay down any debt, did we? If you take out an equity line of credit on your home to pay off your car loan, your debt didn't decrease. Furthermore, if you take out an equity line of credit to pay off your car loan and buy a boat, it would be deceitful on your part to say you reduced your debt, right? This is what happened those four years: We did retire some debt held by the public, but we did so by increasing debt held by the government and the (Federal Reserve). That's not retiring debt. That's just shifting it from one lender to another."
Despite this seemingly incontravertible logic, PF concluded:
We see merit in using both public debt and gross debt, so we are reluctant to declare that Clinton is definitively right or definitively wrong in citing statistics supported by the public debt figure. Clinton's phrasing -- talking about "the debt" and "the national debt" -- strikes us as vague enough to refer to either the public debt or the gross federal debt.
So we are left with a statement that's correct using one measurement and incorrect using another measurement. In addition, Clinton overestimated by about 25 percent the dollar amount by which the public debt declined from its peak during his term, though he also correctly characterized the changes in the debt under Republican presidents. So on balance, we rule Clinton's statement Half True.
As readers likely predict, I feel Clinton's statement should have gotten either a "False" or a "Pants on Fire."
Looking at exclusively public debt would be like a lender only considering your mortgage balance in determining your credit-worthiness while completely ignoring your car loans and your credit cards.
Don't you wish that were the case?
The reality is the Treasury includes moneys owed to Social Security and Medicare in its gross debt figures because they are part of our nation's total debt. Even the National Debt Clock tabulates gross federal debt and not just what is held by the public.
In this instance as it pertains to Clinton's claim, here are the pertinent facts.
Debt held by the public did decline by $452 billion from the end of FY 97 to the end of FY 01. However, the amount held by government accounts - which mostly means Social Security and Medicare trusts - increased by $853 billion. Yet the surpluses in Social Security and Medicare only totalled $534 billion.
This means these trust accounts purchased $319 billion more Treasury paper those four years than their actual surplus. That represents most of the $394 billion increase in gross federal debt during this period.
Remember, we were told at the time that this debt buyback was as a result of the surpluses. Quite the contrary, what happened was debt held by the public was largely converted into debt owned by the Social Security and Medicare trusts as well as the Federal Reserve.
As our budgets are "unified," it is therefore ludicrous to only look at public debt when referring to what the nation owes.
Let me explain. Since 1969, we calculate what's called "unified" budgets meaning they include receipts and expenditures associated with Social Security and Medicare. When the Clinton administration was reporting budget surpluses from 1998 on, and the CBO was projecting "surpluses as far as the eye can see," they were including projected surpluses in Social Security and Medicare.
Without these "trust fund" surpluses, we actually showed what's called "on-budget" deficits in FY 98 and FY 01. In fact, in the four years that we showed unified budget surpluses of a combined $559 billion, fully $534 billion of that came from surpluses in Social Security and Medicare.
Our actual "on-budget" surplus those four years was only $25 billion, a far cry from what was advertised and celebrated.
With this in mind, if we're going to report budget figures that include Social Security and Medicare surpluses - and even brag about our performance - we should certainly include what we owe these programs when we talk about national debt.
Failing this is allowing political figures to have their cake and eat it too.
Something else to consider is media outlets look at the gross debt and not just what's held by the public. When the gross debt past the $13 trillion mark earlier this year, these were some of the headlines:
- ABCNews.com reported on May 26, "National Debt Soars Past $13 Trillion"
- Bloomberg.com reported on May 26, "U.S.'s $13 Trillion Debt Poised to Overtake GDP"
- CBSNews.com reported on June 2, "National Debt Tops $13 Trillion for First Time"
Once again, please recall that Clinton said "national debt."
As such, it appears our friends at PolitiFact were being generous in their ruling, at least in my opinion.
That said, Jacobson was tremendously cordial in his e-mail discussion with me, and appears to have done a nice job of soliticiting varied opinions for this piece.
Also of note, and in case your assumption was that this group always defends anyone named Clinton, this is not the case.
Mr. Clinton has had twelve of his previous comments examined by PF resulting in four "Trues," three "Half Trues," one "Barely True," two "Falses" and two "Pants on Fires."
Maybe this means that the next time the gang at PF is led to examine someone's statements as a result of something I wrote, I'm going to need to plead my case a little better.
To quote the late Ed Hart, we will know in the fullness of time.
