Before we get to the facts of the matter, here’s the context. In an obvious effort to explain why the tax cuts accepted by the House on Wednesday were a terrible thing, the “Evening News” followed its report concerning this issue with a discussion of the federal debt. Anchor Bob Schieffer passed the baton to business correspondent Anthony Mason who began with an interview with the real estate developer that created the national debt clock near Times Square in New York. After discussing the debt with this gentleman, and an economist, Mason stated: “In the Clinton years, when our debt actually began to shrink the clock was turned off and covered up.”
Well, Anthony, the clock may have been covered up during this period, but the gross federal debt never declined during the Clinton years. Not once. According to the debt statistics at the Office of Management and Budget, the national debt was $4.351 trillion prior to the first fiscal budget authorized by President Clinton in 1994. When he left office in 2001, the debt was $5.770 trillion at the end of that fiscal year. That looks like an increase to me, Anthony.
Furthermore, during the years when Clinton and Company were reporting so-called surpluses to America (1998 through 2001), the nation’s debt increased by almost exactly $400 billion, and went up every year even as we were being informed of surpluses as far as the eye can see.
As George Will would say, I guess the eye can’t see very far.
For those interested in facts the drive-by media have been hiding to further their own agenda, the last time our national debt actually declined was in fiscal 1969, and that was the first time since 1957. In fact, the debt has only decreased six years since 1940, with most of them occurring before the majority of America’s citizens were born.
What follows is a closed-captioning transcript of this segment along with a video link.
Bob Schieffer: Critics, as Sharyl and Gloria pointed out, remind us that any tax cut is just going to drive the national debt higher. And to broaden this out a little we want to turn now to our business correspondent Anthony Mason. Anthony, just for the record, how fast is the deficit going up?
Mason: Reporter: Bob, at the rate we're going, we're going to track ten trillion, that's with a "t," dollars by the end of the Bush presidency. $600 a second, that's how fast the national debt is growing on the national debt clock a block from New York’s Times Square. And at more than $8 trillion and counting, the clock can't keep up for long. You're running out of numbers.
Douglas Durst: We're running out of digits, yes.
Mason: Real estate developer Douglas Durst, the clock's owner, says he didn't plan on the debt reaching ten trillion. So, you figure you'll run out of space how soon?
Durst: Within two years.
Mason: The U.S. is in hock as deep as any nation in history. Who holds our I.O.U.S? Well, more than a quarter of our debt is now owed to foreign countries. Japan is our biggest foreign creditor. We've borrowed $673 billion from the Japanese. The Chinese are now number two.
Economist: Well, in a very real sense the Chinese central bank has financed our efforts in Iraq and Afghanistan.
Mason: The bill for the war in Iraq exceeds $260 billion almost as much as we now owe the Chinese government.
Jim Grant: We are all at the mercy of the world's faith in us. The collateral for the dollar is the world's idea of America.
Mason: Jim Grant is the editor of "Grant's Interest Rate Observer." If they lose faith in us, we're in trouble.
Grant: Economists use a technical term…we would be cooked.
Mason: Here's why, if our foreign investors decided to move their money elsewhere we'd have to offer them higher interest rates. That would drive up our own interest rates, make it more expensive to buy homes and pay the mortgage and ultimately make us all poorer.
Economist: You do the math, it just doesn't work and something has got to change.
Mason: Of course, that's what everyone said when the debt clock was first unveiled in 1989 and we owed a mere two trillion. In the Clinton years, when our debt actually began to shrink the clock was turned off and covered up. Did you think you'd have to turn it back on again one day?
Durst: I was sure that something would happen but I never thought it would be like this.
Mason: So Durst is planning to build a bigger clock. Today if we were all billed for the national debt, we'd each owe nearly $28,000. Bob? You can send your check in whenever you like.
Schieffer: We know the Chinese, for example, loan us money.
Mason: Yes.
Schieffer: Because that's one way we can then buy their products. Does anybody ever think that someday they might actually call in that note?
Mason: No one would ever call in the money... the loans, of course, because the U.S. economy would effectively collapse for a time and nobody wants that to happen. What everybody's afraid of is that China, Japan may start investing in India or other countries. Those would become more attractive and we look less attractive and all of a sudden you see what happens.
Schieffer: There you are. Thank you very much, Anthony
