Letter to Star Tribune Editor, 01/29/2000
Comments on Misleading Statements by Clinton and Republicans on National Debt

President Clinton is proposing a budget that he says will allow the national debt to be repaid by 2013. Meanwhile, the Republicans declare they will repay the national debt by 2015. Both Clinton and the Republicans grossly misrepresent the situation, either to exaggerate their accomplishments or to advance their own agendas.

What Clinton should have said was that the national debt held by the public (i.e., debt owed to private individuals, businesses, and non-U.S. Government institutions) will be repaid by 2013. That's far different from what he said, and it is distressing that the media fails to challenge him on such a statement. (See the article 'Clinton to target national debt' in the Star Tribune January 26.)

Our national debt today is about $5.6 trillion. The national debt held by the public is about $3.6 trillion. The $2 trillion difference represents the amount of government IOUs held by the Federal Reserve System and government trust funds. The Federal Reserve System is holding about $500 billion. The largest of the trust funds is the Social Security Trust fund, which is currently holding about $900 billion.

The $5.6 trillion number is relevant, while the $3.6 trillion number is mostly just interesting. The Social Security System is currently projected to run short of funds in 2034, but that assumes that the U.S. bonds it is holding are of value. They are only of value if the U.S. Government considers these bonds a liability, and thus includes them as part of the national debt. If the U.S. Government does not consider the bonds a liability, the Social Security System cannot consider the bonds an asset, and the Social Security System insolvency date would then come much sooner. So, it would be deceptive to say in the same breath that the national debt is currently $3.6 trillion, and that Social Security is solvent till 2034.

I call your attention to the Minnesota Reform Party plank that addresses this deception:

Accurately report the national debt as the sum of the debt owed to the public and the debt owed to all federal trust funds (such as Social Security).

My hope is that the Star Tribune will take its journalistic duty to expose misrepresentations of this type seriously.

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