Surpluses and Federal Debt

The federal government had a surplus of $70 billion in fiscal year (FY) 1998 while total federal debt increased by $109 billion.Why did the debt increase even though the government had a surplus?The answer involves understanding what drives changes in the two components of federal debt, debt held by the public (such as that held by individuals, pension funds, banks, and insurance companies, among others) and debt held by government accounts (mostly in federal trust funds, such as Social Security).Debt held by the public declines when the government has a surplus.But when the government accounts that hold federal debt have surpluses, these surpluses increase debt held by government accounts.If the debt held by government accounts increases faster than debt held by the public decreases, total federal debt rises.