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Did Bill Clinton create the surplus?

Welcome to VoteFacts.  In this video, you can hear some talk about the budget surpluses that the federal government had at the end of the Clinton Administration.   The Street said, "...Bill Clinton turned the largest ever federal budget deficit into the largest surplus."  

It is often suggested that it was Mr. Clinton who is responsible for that surplus - "He left a surplus", people often say.  But, as always, big claims suggest that we need to take some time to focus on facts.  So, here we go using our usual non-partisan data resources.

First, recap on the distinction between federal deficit and debt.

Deficit - The deficit is the difference between the money Government takes in, called receipts, and what the Government spends, called outlays, each year.

Debt - Debt is accumulated deficits.  

Debt during the Clinton tenure, according to Treasury.gov

When President Clinton took office in January of 1993, total public debt was $4.18 Trillion (and some change).

When President Clinton left office in January of 2001, total public debt was $5.7 Trillion (and some more change).

*NOTE:  Someone in this video says that while Clinton was in office "we paid down the debt", but our debt increased every year under the Clinton Administration, including the 4 years we had budget surpluses.  What happened there?  We focus on those facts here as well, so cast your vote.

Moving on to deficits and budgetary balance

Let's continue our research.  We are trying to get an idea about whether Clinton can be claimed to be responsible (or even mostly responsible) for the budgetary surplus that we had from 1998-2001.  For that we can turn to the Congressional Budget Office (CBO) and the Office of Management and Budget (OMB).  What was happening between the president and the Republican controlled Congress?  Here are the words of the CBO...

The Congressional Budget Office (CBO)

On November 20, 1995, the Republican controlled Congress cleared and the President signed the third Continuing Resolution for Fiscal Year 1996.  The resolution provided appropriations through December 15 and ended a six-day shutdown of the federal government. In the resolution, the Administration and the Congress agreed on the goal of balancing the federal budget by 2002 while protecting future generations, ensuring the solvency of Medicare, reforming welfare, stimulating economic growth, and providing adequate funding for certain high-priority programs.  

On the same day, the Congress approved the Balanced Budget Act of 1995, which would eliminate the federal budget deficit in seven years under the economic and technical estimating assumptions of the Congressional budget resolution.  Prior to that, the Clinton Administration submitted a plan that would balance the budget in the same time period, using its own, more optimistic estimating assumptions.  CBO, Page 1

A year later, in March (1996), President Clinton submitted another proposal for reaching budgetary balance by 2002.  The Republican controlled Congress adopted its own plan in June 1996 for balancing the budget by 2002 under CBO's economic and other estimating assumptions.

The Congress' Resolution to balance the budget included a table that allocates discretionary spending levels by major function, but how the totals would be distributed among individual programs is not known. Contingent policies in President Clinton's budget include ending the proposed tax cuts for the middle class and other adjustments after 2000 and lowering spending levels for discretionary programs in 2001 and 2002.  Neither the March budget nor the July midsession review reveals how the President would allocate the contingent reductions in discretionary spending among individual programs.

Total discretionary outlays in the Congress' Budget Resolution were lower in every year than the level proposed by President Clinton, even under the contingent policies that would be needed to reach budgetary balance under CBO's assumptions.  Although the difference is quite small for 1997, it represents $10 billion to $13 billion for 1998 through 2002.   (CBO, Pages 1-4)

Screen Shot 2014-03-26 at 9.58.38 AM

Still, a year after that, the CBO revealed their analysis of the budgetary blueprint submitted by President Clinton for 1998.  Here is what they found:

President Clinton's 1998 budget calls for increases in total discretionary spending levels, particularly for nondefense programs.  The proposed spending levels for 1998 through 2002 are substantially above the 1997 Budget Resolution targets for that period and presumably will be an important focus of any budget negotiations between the Congress and the Administration.  In a time of constrained spending limits, there is an obvious need to make a convincing case to the Congress for any increases in annual appropriations.  (CBO, Page 2)

So it looks like the Congress and the President spent some time battling over whether to increase taxes (even on the middle class) and increase federal spending, as the president wanted, or reduce both taxes and spending as the approach that Congress preferred.  Although there was likely give-and-take, we can look to the CBO and OMB to give us an idea about who seems to have had the bigger win.

The Congressional Budget Office (CBO)

The two reconciliation acts that President Clinton signed into law on August 5, 1997 the Taxpayer Relief Act of 1997 and its companion, the Balanced Budget Act of 1997 contained the first major cut in federal taxes since the early 1980s.

The Office of Management and Budget (OMB)

Between 1998 and 2001, federal tax receipts were higher than federal outlays (also known as a budget surplus).  In the year 2000, for example, federal tax receipts were 20.6% while spending was at 18.2% of GDP.  For the year 2001, tax receipts were 19.5% with spending again at 18.2%.

You have traveled down Fact Lane from the past to gather a bit more information on this subject.  So, head on over and chime in on today's question.



Resource Links

Treasury.gov definitions

Treasury.gov Debt to the Penny

OMB Table Deficits

CBO Report, 1995

CBO 1996 Budget Resolution

 CBO, 1997

 OMB Table, Tax Receipts and Spending

For more on this subject, see these posts:

Is Obama more conservative than Reagan or Bush?

Is the Obama plan the same as what worked under Clinton? The Street
Vote Now
Bill Clinton gets the credit for the surplus. Agree or Disagree?
You Decide! Vote Now
Agree Disagree



 

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