The US has not spelled outhow it would pay back the debt but it could have a huge impact on the structure of US Treasury bonds, the world's largest and most liquid debt market.
The proposal is an attempt to outflank Congressional Republicans, who want to use the budget surpluses for tax cuts. Mr Clinton wants to use them to strengthen the pension system, which risks tipping into insolvency after 2015, as the baby boom generation retires.
Government studies show the pension system, called Social Security, going broke by 2034. The President's scheme is designed to keep the system solvent until 2053 "by ensuring that all payroll taxes go to savings and debt reduction for Social Security", an official said. The booming US economy has allowed a revision of revenue and spending estimates.
"Improvements in the outlook since February have added $179bn to the projected budget surplus over five years, half a trillion dollars over ten years, and one trillion dollars over 15 years," said the President. "If we maintain our fiscal discipline ... using the savings to strengthen Social Security, America will entirely pay off the national debt by 2015."Reuse content