Who Cut The Budget Deficit?
April 2, 1996
President Clinton has been taking credit for cutting the federal budget deficit, but analysts point out that he only cut defense spending -- and he did that to get the funds to pay for expensive pet social programs and entitlements.
- The deficit has been reduced from $290 billion in 1992 to $164 billion in 1995.
- But because of the Clinton tax hikes in 1993, federal revenues fell $79 billion short of 1994 goals, and $60 billion short in 1995 -- even though the economy was expanding.
- Although the administration has been claiming credit for 1993's deficit drop of $35 billion, that was actually the last year of the Bush budget.
- Had Congress not killed Clinton's $16 billion "stimulus package," the reduction would have been even smaller.
Later events proved that the stimulus package was unnecessary to begin with: joblessness dropped from a forecast 7.2 rate for 1993 to 6.8 percent.
- Economic factors such as lower jobless and interest rates contributed to 1994's $22 billion deficit drop, and 1995's $13 billion reduction -- for a total of $35 billion.
- Certain technical factors -- such as additional revenues from the winding-down of the savings and loan bailout, and slowed Medicare and Medicaid spending -- worked in Clinton's favor in 1994 and 1995, saving $106 billion.
- A surplus in Social Security of $14 billion in 1995 over 1993 helped to mask the true size of the deficit.
Thus, economic, technical and Social Security factors accounted for a total of $155 billion in deficit reduction over the past two years.
Source: Editorial, "Clintonomics: The Real Record," Investor's Business Daily, April 2, 1996.
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