Focus Point - Surplus Nonsense

Commentary by Pete du Pont

I'm Pete du Pont with the National Center for Policy Analysis. One of the more disingenuous claims is coming these days from Washington Democrats who blame the falling budget surplus on the Bush tax cuts. But the villain is the slowing economy, not the tax cuts.

In 1995, the first year the budget contained an estimate for fy2001, Bill Clinton predicted a deficit of $193 billion. In his last budget, Clinton put the surplus at $256 billion.

What happened?

Congress cut capital gains taxes in 1997. So that year, the White House, reflecting its belief that tax cuts only lower revenues, lowered its 2001 projections from a $108 billion surplus to just $7 billion.

But the real world of supply-side effects kicked in, and over the next two years, the Clinton Administration raised its surplus estimate, despite the passage of a large tax cut.

Naturally, they credited other factors. But we know better, just as we know revenue projections will increase in future years as the growth stimulating tax rate reductions kick in.

Those are my ideas, and at the NCPA we know ideas can change the world. I'm Pete du Pont, and I'll see you next time.