Clinton was able to bypass this period through reasonable taxes on capital gains/dividends and was able to build a surplus, even though it never began to chip away at the national debt.

The thousand pound gorilla in that room is the current accounts deficit, though. Because it means that the sovereign surplus during the Clinton years was essentially made up of fake money - Clinton restored the sovereign cash flow to surplus, but he did nothing to confront the structural trade deficit, which meant that the sovereign surplus could only continue as long as the private sector ran a net deficit. That is, as long as asset prices increased fast enough to cover the increased borrowing to finance the private sector's deficit spending. Which, translated from econospeak to English, means only as long as the bubble was still inflating.

Now, don't get me wrong - the phony wealth was generated in the private sector, and it was entirely appropriate of Clinton to make sure that as much of that phony wealth as possible went towards reducing the sovereign's obligations to bondholders. But to look only at the Clinton-era sovereign surpluses is to miss the real story of the US economy in the '90s. And on the underlying issue of structural import dependency and de-industrialisation, Clinton barely even slowed the trend.

- Jake

If you only spend 20 minutes of the rest of your life on economics, go spend them here.