NCPA - National Center for Policy Analysis

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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