NCPA - National Center for Policy Analysis

Clinton's Astounding Budget

February 2, 1999

Advocates of limited government and restrained government spending are reeling at the vastness of President Clinton's proposed fiscal year 2000 budget. With the single exception of 1944 during World War II, never in the history of the U.S. would the federal government grab a greater share of the nation's gross domestic product.

  • Clinton's budget calls for Washington to seize 20.7 percent of the nation's productive output.
  • In 1944, the take was 20.9 percent -- and that fell the following year to 20.4 percent of gross domestic product (GDP).
  • At the height of the Korean War in 1952, the federal share was 19 percent; and in both 1969, during the Vietnam War, and in the Cold War era of 1981, the stake was 19.7 percent.
  • Moreover, proposed changes in the tax laws would result in a five-year net tax increase of $45.8 billion.-- as some tax increases totaling $82 billion would be offset by a few tax breaks aimed at favored constituencies.

Critics deplore the tax-bracket creep that is the result of prosperity. As incomes rise, taxpayers are steadily pushed upward into steeply progressive tax rates.

Meanwhile, federal spending increases. Budget experts at the Cato Institute have identified nearly $150 billion in new spending during the next five years. With inflation running below 1 percent in 1998, the budget projects hefty increases of more than 4 percent during both 2000 and 2001 for domestic discretionary spending.

Sources: Editorial, "The Lewinsky Budget," Wall Street Journal; and editorial, "Tax and Spend, Tax and Spend," Washington Times, both February 2, 1999.

 

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