Restoring Fiscal Discipline, Replacing Decades of Budget Deficits with Surpluses
Moving From Record Deficits to Record Surplus
- In 1992, the deficit was $290 billion, a record dollar high, and was projected to reach over $400 billion this year. Instead, we had a budget surplus of $124 billion in 1999.
- The current surplus is the largest dollar surplus on record (even after adjusting for inflation) and the largest as a share of our economy since 1951.
- With the government no longer draining resources out of capital markets, businesses have more funds for productive investment. This has helped to fuel a 12 percent real annual increase in producers' durable equipment investment since 1993 - the sixth year in a row of double-digit growth. This compares to 3 percent annual growth from 1981-92, a period that saw the debt held by the public quadruple.
[source: National Economic Council; OMB, 12/3/99]
Paying Off the National Debt
- In 1999, public debt was reduced by $88 billion, which follows the $51 billion debt reduction in 1998, and brings the two-year total up to $140 billion. Public debt is $1.7 trillion lower in 1999 than was projected in 1993.
- As a result of Clinton-Gore debt reduction, interest payments on the debt were $91 billion lower than projected. In 1993, the net interest payments on the debt held by the public were projected to grow to $321 billion in 1999.
- Debt reduction brings real benefits for the American people. Reduced debt means lower interest rates and reduced payments on car loans and student loans. A family with a home mortgage of $100,000 might expect to save roughly $2,000 per year in reduced mortgage payments. Lower interest rates have saved families with typical car loans or student loans $200.
- With the President's plan, we are now on track to eliminate the nation's publicly held debt by 2015. The last time the United States did not have a national debt was during the administration of Andrew Jackson (1835).
[source: OMB, 10/27/99; Treasury Dept, Office of Economic Policy, From Widening Deficits to Paying Down the Debt: Benefits for the American People, 8/4/99]
Fiscal Discipline for America's Future
- From 1980 to 1992, spending as a share of GDP increased, rising from 21.7% to 22.5%. Since President Clinton took office, spending as a share of the economy has fallen from 22.5% in 1992 to 19.3% in 1999 -- the lowest level since 1974.
- Real discretionary spending has declined by more than one-half percent per year under President Clinton; from 1980 to 1992, real discretionary spending increased 1.0 percent per year.
- At the same time, President Clinton has increased investments in education, technology and other areas that are vital to growth.
[source: Office of Management & Budget, 10/27/99; Budget of the U.S. Government FY 2000, “Historical Tables,” (table 8.4)]