Today, President Clinton and Vice President Gore Release Their FY2000 Budget: After Years of Escalating Deficits, We Have Now Entered An Era of Surpluses -- With The Surplus This Year Projected To Be $79 Billion -- The Largest on Record:
· Instead of $404 Billion Deficit, $79 Billion Budget Surplus This Year. When President Clinton and Vice President Gore took office, the Congressional Budget Office (CBO) projected the deficit to be $404 billion this year and heading higher; now, the Administration projects the surplus to be $79 billion this year and growing bigger.
· $79 Billion Surplus -- The Largest On Record. In 1992, the deficit was $290 billion -- the biggest dollar deficit in American history. This year, OMB projects the surplus to be $79 billion -- the biggest dollar surplus in American history. As a share of GDP, the budget surplus would be 0.9 percent this year -- the largest since 1957.
· Seven Years in A Row of Fiscal Improvement -- The First Time in U.S. History. Reaching a $79 billion surplus in 1999 would mark the seventh consecutive year of improved fiscal balance -- the longest period in American history.
· Surplus Estimated To Reach $187 Billion By 2002. President Clinton promised to balance the budget by 2002. The budget will be balanced this year -- for the second year in a row -- and the surplus is expected to hit $187 billion in 2002 -- part of what would be the longest and largest debt reduction in our history. And, instead of the $579 billion deficit projected by CBO for 2002, we now project a surplus of $187 billion -- a $766 billion swing.
· President's Plan Will Result In Debt Being Cut By More than Two-Thirds And Lowest Debt-to-GDP Ratio Since 1917. As a share of the economy, the publicly held debt increased from 26 percent in 1981 to 50 percent in 1993. Since President Clinton took office, the publicly held debt as a share of GDP has dropped to 44 percent. And under the President's framework, the debt held by the public would be cut by more than two thirds and it would fall from 44 percent today, as a share of GDP, to 7.1 percent in 2014 -- its lowest level since 1917.
· While Producing the Smallest Government in A Quarter Century, President Clinton Has Expanded Critical Investments in the Future. President Clinton's 1993 Economic Plan included $255 billion in spending cuts over five years -- more than half of the total deficit reduction package. As a result, federal spending as a share of the economy has declined for each of the past six years and is now the lowest in 25 years. However, as spending has been cut in lower priority areas, President Clinton has dramatically increased funding in critical areas, such as education and training, children, the environment, health care, and research and development. Indeed, investments in key education and training programs have nearly doubled since 1993.
· While Eliminating The Budget Deficit, President Clinton Has Provided Tax Relief for Middle-Income Families. Because of the tax cuts for working families signed into law by the President in 1993 and 1997 -- for example, the expanded Earned Income Tax Credit, the $500 child tax credit, the $1,500 HOPE Scholarship Tax Credit, and the Lifetime Learning Tax Credit -- the typical American family of four will face the lowest federal tax burden in more than two decades. President Clinton proposes to build off this record to provide additional targeted -- and fully paid for -- tax relief for retirement savings, long-term care, child care, education, community revitalization, and the environment.
For America's Working Families, The Improved Fiscal Situation Means Lower Mortgage Rates And A Brighter Economic Future. Here's what the improved fiscal situation means to typical families:
· Lower Deficits Mean Lower Interest and Mortgage Rates -- Saving Families Thousands. The government's share of total borrowing in U.S. credit markets has been eliminated from nearly 60 percent just six years ago -- which, according to the Wall Street Journal (5/7), has played a "major role" in keeping down interest rates. Since 1993, about 18 million families have refinanced their homes -- and according to the New York Times and Money magazine, these families have saved an average of $1,000-$2,000 per year in lower mortgage payments.
· Lower Mortgage Rates Mean Higher Homeownership. Lower mortgage rates -- along with higher family incomes, faster job growth, and the President's National Homeownership Strategy -- have helped raise the national homeownership rate to its highest level in American history.
· Lower Interest Rates Mean Faster Business Investment Growth. Under President Clinton, real business investment growth has averaged 12.5 percent -- the fastest since John Kennedy was President.
· Faster Business Investment Growth Means Faster Economic Growth and More Jobs. Faster business investment growth helps expand capacity and has led to faster economic growth and more jobs under President Clinton. Since President Clinton took office, the private sector of the economy has grown 4.0 percent per year, the economy has added 17.7 million new jobs, and unemployment has fallen to 4.3 percent -- the peacetime lowest in 41 years. America has the longest peacetime economic expansion in history.
Experts Agree That President Clinton's 1993 Economic Plan Helped Cut the Deficit, Lower Interest Rates, Spur Business Investment, and Strengthen the Economy. The economy and the budget are now working in a virtuous circle -- lower deficits have led to lower interest rates which have led to faster business investment which led to faster growth which led to even lower deficits. Experts agree that the President's 1993 Economic Plan helped create this virtuous circle.
· Alan Greenspan, Federal Reserve Chairman, 2/20/96: The deficit reduction in the President's 1993 Economic Plan was "an unquestioned factor in contributing to the improvement in economic activity that occurred thereafter."
· Business Week, 5/19/97: "Clinton's 1993 budget cuts, which reduced projected red ink by more than $400 billion over five years, sparked a major drop in interest rates that helped boost investment in all the equipment and systems that brought forth the New Age economy of technological innovation and rising productivity."
· Goldman Sachs, March 1998: One of the reasons Goldman Sachs cites for "the best economy ever" is that "on the policy side, trade, fiscal, and monetary policies have been excellent, working in ways that have facilitated growth without inflation. The Clinton Administration has worked to liberalize trade and has used any revenue windfalls to reduce the federal budget deficit."
· U.S. News & World Report, 6/17/96: "President Clinton's budget deficit program begun in 1993... [led] to lower interest rates, which begat greater investment growth (by double digits since 1993, the highest rate since the Kennedy administration), which begat three-plus years of solid economic growth averaging 2.6 percent annually, 50 percent higher than during the Bush presidency."
· Paul Volcker, former Federal Reserve Chairman, Audacity, Fall 1994: "The deficit has come down, and I give the Clinton Administration and President Clinton himself a lot of credit for that... and I think we're seeing some benefits."