Clinton And Republicans Share Credit For Budget Balancing
November 30, 1998
Fiscal year 1998 ended on September 30 with the first balanced budget since 1969. Less than three years ago, Republicans wanted to balance the budget by 2002, but Clinton thought this was too much deficit reduction too fast. Indeed, as early as January this year neither side thought balance was achievable before next year.
Both sides tried to claim credit. Clinton pointed to his 1993 budget package, but Congressional Republicans noted that in his first budget after Republicans took control of Congress in 1994, Clinton projected continued triple-digit deficits -- $275 billion in fiscal year 1998 alone.
Both groups contributed to elimination of the deficit, as shown by a comparison of the last budget before Clinton took office and the most recent completed budget.
- In 1992, the federal budget deficit was 4.7 percent of GDP.
- In 1998, we had a surplus of 0.8 percent of GDP, a turnaround of 5.5 percent of GDP.
- Of this change, exactly half was due to higher taxes and half due to lower spending, each contributing 2.8 percent of GDP. (Totals may not add due to rounding.)
On the tax side, individual income taxes have risen by 2.2 percent of GDP since 1992. (GDP was $8.4 trillion in fiscal year 1998.) This means that individuals paid $185 billion more taxes in 1998 than they would have paid had taxes remained at the 1992 percentage of GDP.
On the outlay side, national defense accounted for almost three- fifths of the total reduction. However, showing Clinton's priorities, spending has risen for health programs and Medicare. Republicans can point to lower welfare spending and reductions in many appropriated programs.
Source: Bruce Bartlett, senior fellow, National Center for Policy Analysis, November 30, 1998.
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