Defense Cuts, More Taxes Helped Balance Budget
February 9, 1998
Last week, President Bill Clinton presented his budget for fiscal year 1999, which begins on October 1, 1998. He pointed with great pride to the projection of a balanced budget next year, the first since 1969.
However, higher federal taxes account for half of the decline in the deficit.
- In fiscal year 1992, federal revenues consumed 17.8 percent of gross domestic product (GDP), according to the Office of Management and Budget (OMB).
- In 1999, federal taxes are expected to eat up 20.1 percent of GDP, an increase of 2.3 percent.
- With GDP estimated to be $8.8 trillion next year, Americans will be paying an additional $200 billion more in federal taxes than they would if taxes remained at their pre-Clinton percentage of GDP.
Clinton has also reduced spending significantly. Federal outlays in 1999 will have fallen from 22.5 percent of GDP in 1992 to 20 percent. However, three-quarters of this decline is due to solely lower defense spending, which will have fallen from 4.9 percent of GDP in 1992 to 3.1 percent next year (see figure).
In short, the budget has been balanced almost entirely on the backs of taxpayers and at the expense of our national security.
Source: Bruce Bartlett (senior fellow, National Center for Policy Analysis), February 9, 1998.
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