Did Bill Clinton Really Create a Budget Surplus? Part 1
President Bush is annoying me with his fiscal irresponsibility. The federal budget deficit is out-of-control and I don’t forsee it getting better in the near future.
Democrats are also quick to criticize President Bush and the growing federal budget deficit. They especially like to point out how the federal budget went from running a surplus under Bill Clinton to running a deficit under President Bush.
Is that a fair comparison?
Let’s analyze the situation.
There are three fundamental ways to eliminate a budget deficit:
1) Increase tax revenues.
2) Decrease spending.
3) Do a combination of 1 and 2.
Democrats imply that Bill Clinton was fiscally responsible, controlled federal spending and enacted policies that caused economic growth. They believe the surplus was caused by President Clinton’s firm hand at the economic/budgetary wheel.
Curious to find the true story, I did some research, consulting the best source of information I could find about the federal budget – the federal budget itself.
Here is the data, directly from the Federal Budget for Fiscal Year 2006. (All amounts are in millions of dollars.)
During Bill Clinton’s presidency, from 1992 to 2000:
- Spending increased by 29.49%.
- Tax revenues increased by 85.58%.
Obviously, Bill Clinton did not control federal spending since it increased by almost 30% during his tenure. What saved his goat was the dramatic 85.58% increase in tax revenues.
So the raw data show that although federal spending increased dramatically during Clinton’s term, tax revenues increased even faster!
That’s why there was a budget surplus - tax revenue increased at a faster pace than Bill Clinton could spend it. The surplus had nothing to do with his ability to intentionally balance the budget.
Coming soon – Part 2!
posted by The Phantom Republican @ 10:58 PM
43 comments
43 Comments:
Will you analyze preceding years 2001 through Q3 2007? See what that picture looks like.
Ummm, this information is biased and completely inconclusive unless you also analyze the Bush adminstrations spending increases for the entire duration of his presidency thus far. Otherwise, we are simply comparing Clinton to Clinton!!! This doesn't make sense.
Maybe I'm a total idiot, but if I'm correctly reading what you wrote, Clinton satisfied one of your ways of creating a surplus by increasing revenues. The fact that spending increased as well doesn't seem to matter because the revenues were significantly higher.
And what was he spending more on? Was it programs to stimulate economic growth? I don't know. At any rate, I don't understand your argument.
So you like massive spending (Bush's record new budget, Jan 2008) and his lower taxes. Where does the all the extra money he's spending come from?
Highest budget deficit in history!!! You can cut taxes and increase spending at the same time.
If I ran my business like Bush, I'd be out of business.
We may have had higher taxes under Clinton, but he didn't spend more than he took in.
This comment has been removed by the author.
This comment has been removed by the author.
To begin with, thank you for commenting on my post.
Your comments seem to assume that I support Bush's economic policies. I do not. In fact, I open the post by making that point.
The purpose of this post was to counter the argument that Bill Clinton created the surplus by controlling spending. This post shows that's not true. Spending increased by a large amount during his terms.
I would argue that the main reason federal tax revenue increased was the windfall of capital gains taxes from stock profits during the Internet Bubble. I think most people would agree that artifically pumping up the stock market is an unhealthy way to increase tax revenue.
I will analyze Bush's tenure soon. I expect it will be ugly.
Both Bill Clinton and George W Bush allowed government spending to continue to rise during their respective presidencies. It feels great knowing I work 3-4 months a year for the governmet (based on my effective tax rate), despite the fact I am in private industry. It is also great to know that entitlment programs utilize 70% of all funds for overhead. Whereas, if my taxes were less I could give more money to private non-profits where only 10-20% of my donations go to overhead.
While Bush's 2003 tax cuts had a positive effect on the economy, it is not sustainable with the rate of government spending during his tenure. The root of the problem lies in partisian politics and his love for the oil industry. He is on the right track trying to add private accounts to Social Security. On the other hand, he continues to subsidize industries (i.e. Oil, Farm).
Taking a look at the current array of presidential candidates, McCain seems to have a lead as being fiscally responsible. Take a look at his voting record as a Senator. As expected, Barack Obama and Hillary Clinton plan to increase entitlement program benefits and pay for it through increased taxation of those providing the most value to society (i.e. high income earners) and overtaxing corporations. Great policy if you support socialism.
On a different note, the tax rebate that was just approved is election year politics at its best. Let's give a rebate to those that didn't pay any taxes in the first place (i.e. redistribution of wealth).
Seems to me that Congress has a hand in what the nation spends. Clinton had a republican congress that helped control over spending. Isn't it a demcrat controlled House and Senate that is sending legislation up to Bush to sign. Don't you think they could knock out over spending? Through out history, Congress has been controlled by democrats and thus, programs, entitlements and spending. So who is to blame?
Seems to me that Congress has a hand in what the nation spends. Clinton had a republican congress that helped control over spending. Isn't it a demcrat controlled House and Senate that is sending legislation up to Bush to sign. Don't you think they could knock out over spending? Through out history, Congress has been controlled by democrats and thus, programs, entitlements and spending. So who is to blame?
Also, clinton's budget rose 29% while tax revenue's rose 85% due to capital gains during the dot.com era. He was able to balance the budget due to increased income, not reduced spending
What policies didi Clingain implement to gain economic growth ?
I found this helpful information. Thank you for taking your time to provide us the analyzation. Now, I can actually cite numbers to reflect increases in spending & taxes under Clinton.More Americans should know this , especially with a clinton running in '08
This article totally ignores the job growth that occured during the Clinton Presidency. In February 2000, the United States entered the 107th consecutive month of economic expansion -- the longest economic expansion in history. 22.2 million new jobs have been created since 1993, the most jobs ever created under a single Administration -- and more new jobs than Presidents Reagan and Bush created during their three terms. 91 percent (19.9 million) of the new jobs have been created in the private sector, the highest percentage in 50 years.
I think the following numbers are sufficient
to answer some of Bill Clinton's claims of
his administrations effects on the budget
surpluses claimed by him during his administration.
After all, Hillary has endorsed these claims!!
http://www.treasurydirect.gov/
NP/NPGateway
(National debt at beginning of year)
Date - Debt Held by the Public - Intragovernmental Holdings - Total Public Debt Outstanding
01/04/1993 Not Available Not Available 4,167,872,986,583.67
01/03/1994 Not Available Not Available 4,512,315,337,989.71 +345 B
01/03/1995 Not Available Not Available 4,798,116,945,333.39 +286 B
01/02/1996 Not Available Not Available 4,988,495,380,113.30 +190 B
01/02/1997 Not Available Not Available 5,317,016,511,039.02 +329 B
01/05/1998 Not Available Not Available 5,481,924,290,553.50 +164 B
01/04/1999 Not Available Not Available 5,606,630,290,821.39 +125 B
01/03/2000 Not Available Not Available 5,751,743,092,605.50 +145 B
01/02/2001 Not Available Not Available 5,728,739,508,558.96 -23 B
Instead, the president explained, the $5.7 trillion national debt has been reduced by $360 billion in the last three years -- $223 billion this year alone. (as shown below)
http://archives.cnn.com/2000/ALLPOLITICS/
stories/09/27/clinton.surplus/
September 27, 2000
Web posted at: 4:51 p.m. EDT (2051 GMT)
WASHINGTON (CNN) -- President Clinton announced Wednesday that the federal budget surplus for fiscal year 2000 amounted to at least $230 billion, making it the largest in U.S. history and topping last year's record surplus of $122.7 billion.
"Eight years ago, our future was at risk," Clinton said Wednesday morning. "Economic growth was low, unemployment was high, interest rates were high, the federal debt had quadrupled in the previous 12 years. When Vice President Gore and I took office, the budget deficit was $290 billion, and it was projected this year the budget deficit would be $455 billion."
Instead, the president explained, the $5.7 trillion national debt has been reduced by $360 billion in the last three years -- $223 billion this year alone.
http://www.letxa.com/articles/16
This link breaks down your point a little further. We did not have a surplus when Clinton was in office. What Clinton did was pay down the public debt--notice that the claimed surplus is relatively close to the decrease in the public debt for those years. But he paid down the public debt by borrowing far more money in the form of intergovernmental holdings.
The net effect was that the national debt most definitely did not get paid down because we did not have a surplus. The government just covered its deficit by borrowing money from Social Security rather than the public. The link provided above has a lot more information that will undoubtedly answer a lot of questions or comments posted in regards to this message.
I just wanted to state that I am a Democrat. I don't support Bush at all and I think that he has made a much bigger mess of things. I am just tired of hearing that there was a surplus when there wasn't.
29% over 8 years is manageable. That's 3.5% per annum.
Under Bush spending has increased at DOUBLE THE RATE PER ANNUM (7%)as it did from 92-00.
Stop the spin.
In the Clinton years, we cut welfare, passed "pay as you go" and slashed military spending. There was some level of control on spending.
Under Bush military spending has absolutely exploded. The man didnt veto ONE spending bill for his first 6 years in office.
No comparison WHATSOEVER
For those of you confusing the national debt with the budget surplus, they are completely different animals. No one ever said their was a national debt surplus. The difference between the 2 parties on spending seems to be that the Republicans seem to believe that you can increase spending while giving huge tax cuts to already wealthy Americans and corporations, causing the middle class and poor to suffer even more. At least the Democrats find a way to pay for what they spend by prioritizing spending instead of just increasing it with reckless abandon. This is our country, and our government, therefore we, as taxpayers and the largest source of income for our government, have to pay the bills in the form of income tax. Either that, or we continue to borrow money (sell our government) from foreign countries.
It really does not matter 'what saved' Clinton as you put it, the point is that he left us with a surplus and not with a 10 trillion deficit, countless countries buying our debts, a mortgage crisis, a stock market in shambles a slumping dollar. And like politically correct said you need to compare the Clinton years to the Bush years for this to not smell like republican propoganda.
Here is an article from 1998 posted on CNN that proposed how Clinton was going to create a surplus (which he did) and achieve his objectives of how he wanted the money spent. Please always research. It is irresponsible not to have all the facts. Please read below:
Clinton Unveils His Balanced Budget
WASHINGTON (AllPolitics, Feb. 2) -- Touting its zero deficit at every turn, President Bill Clinton on Monday unveiled his $1.7 trillion 1999 spending proposal for the federal government.
"This budget marks the end of an era," Clinton said, "an end to decades of deficits that have shackled our economy, paralyzed our politics and held our people back. It can mark the beginning of a new era of opportunity for a new American Century." (224K wav sound)
The budget contains no giant surprises. It is four volumes and 2,514 pages of legal language formally proposing the programs that Clinton has been talking about for weeks, and which he summarized in his State of the Union address last week.
Major initiatives include a new $21 billion child-care initiative, more than $7.3 billion in new education spending, controversial new proposals to expand Medicare and a challenge to the states to aggressively sign up poor children who are eligible for Medicaid but not now enjoying its benefits.
Clinton several times emphasized his State of the Union pledge to apply every penny of any surplus to bolstering Social Security, though many congressional Republicans are eyeing tax cuts instead. (160K wav sound)
Clinton's budget also proposes roughly $25 billion in "loophole closers" -- otherwise known as tax increases -- including eliminating tax breaks enjoyed by banks, real estate investment trusts and multinational corporations.
The new Clinton budget also envisions raising more than $65 billion over the next 10 years through a national tobacco settlement; that translates into roughly a $1.50-a-pack increase in cigarette taxes.
Many of the president's new initiatives would be paid for from the proceeds of the settlement, which is hardly a done deal.
"The whole budget is based on the tobacco settlement and ... I think it is fair to say when you talk to people on the (Capitol) Hill that the tobacco settlement is dead," Richard May, a former House Budget Committee staff director, told The Associated Press.
The White House says it will find the money elsewhere should the settlement not pass.
Budget director Franklin Raines says he is optimistic about the tobacco bill's chances. "We are quite confident that the majority of the American people want to see this kind of legislation to raise the cost of cigarettes," he told the AP, "and we believe that ultimately the Congress is going to reflect the view of the American people."
Clinton's budget forecasts surpluses of $218.8 billion over the next five fiscal years: $8.5 billion in 2000; $28.2 billion in 2001; $89.7 billion in 2002; and $82.8 billion in 2003.
"It is obvious that you can have a smaller government, but a more progressive one, that gives you a stronger America," Clinton said.
"We've done more than simply balance the budget, more than just line up numbers on a ledger," he said. "We have restored the balance of values in our policy, restored the balance of confidence between government and the public. Now, we'll have a balanced budget not only next year, but as far as the eye can see."
Clinton called for bipartisan cooperation in passing the first balanced budget since 1969, but his own budget is crafted with congressional politics in mind.
Its proposed spending for defense and transportation, for example, is significantly lower that the levels favored by congressional Republicans. The White House deliberately earmarked funds for Clinton's pet programs and left transportation, defense and other areas to negotiations with Republicans.
Clinton applauded the efforts of past and present Congresses that have voted for tough measures to bring the deficit down, and saluted the American people for staying the course.
"For more than two centuries, Americans have strengthened our nation at every critical moment with confidence, unity and determination to meet every challenge," Clinton said. "For too long, the budget deficit, a worsening crime wave, the seemingly unsolvable welfare difficulties, they all seems to challenge our innate American confidence. In the past five years, the American people have met these challenges, and have moved to master them." (320K wav sound)
Clinton's budget projections are based on conservative economic growth estimates. The administration is predicting growth of just more than 2 percent per year; annual growth in the last quarter was more than 4 percent.
White House aides say their lower estimates leave room for a cushion in case the Asian financial crisis has a greater effect on the U.S. economy than now anticipated. Of course, increasing the growth estimates during budget negotiations would also open the door to higher spending and make it easier to bridge the differences between White House and GOP priorities.
At the end of the president's presentation, Vice President Al Gore handed Clinton a ceremonial magic marker, and Clinton turned to a chart entitled 1999 deficit, filling in the blank with a bold "0!"
CNN's John King contributed to this report.
Lot of anonymous going on. Whatever might have been surplus is only logical because there was nothing going on that required massive spending. Additionally, the dotcom boom raised tax revenue.
There is an argument to be made about military spending, but that's another (much longer) post. One could also argue that about 70 percent of the budget is untouchable to begin with.
So many people who are Republicans complain about spending money on entitlements. They claim this is socialism. Would it make them feel better if millions of Americans never went to college? If poor people were dying in the streets because a lack of health care? If every time you left your home poverty stricken Americans approached you with a tin cup begging for money? Isn't it being truly humane to help people attain the a certain level of opportunity, especially those people whom your ancestors enslaved in order for you to be able to enjoy the wealth that you have? People who for hundreds of years were denied the equal access to opportunity that your for fathers were given. Your prosperity is the result of a legacy of social injustice. My poverty is a result of that same social injustice,which you insist on ignoring. Entitlements give poor people hope, and hope leads to prosperity.
anonymous says, "Entitlements give poor people hope, and hope leads to prosperity"
(laughter)
What has been proven over the long haul of many entitlement programs is that the cost/benefit is on the bad side. More people tend to rely on the entitlements than turn that "hope" into prosperity. Hard work, desire, education, and entrepreneurship lead to prosperity. We spend more on education today than ever, so why is there not hope in our schools? Wasted money! Vicious circle that snowballs into increased amount of spending on such programs...which comes from our hard earned tax dollars. I'd rather see a lengthy commercial campaign preaching education, work values to change attitudes than funding for government programs. The problem the US will have in the next 40 years is that we have an aging population and smaller percentage of the population will be contributing towards these programs. It will be virtually impossible for any "hope" to turn into prosperity.
I really have to take issue with your assertion that Bill Clinton was simply a "tax and spend liberal." Indeed, he did raise some taxes, but he also cut spending, reformed welfare, trimmed the size of the government, and drastically cut the deficit. That last point is crucial: he worked intimately with Alan Greenspan to create sound fiscal policies so that Greenspan would lower short-term interest rates and so that bond holders would reduce long-term interest rates. Success in both allowed for greater economic activity, which made all people richer, which also meant higher tax revenue.
If I were you, I would do more research.
Interesting! This might be difficult to do, but I am thinking there is a little adjustment for inflation.
I am looking into comparing Clinton's 'surplus,' GW's record setting deficit, and Obama's new record setting deficit.
Regarding adjustment for inflation; we can not compare the value of the dollar during the Reagan or Carter eras to now.
Boy oh boy, lots of the comments did not agree with your post. I find when people read things, they look for the one thing the disagree with and attack that.
For instance, if I say, "Have a friggin' great day," what do you think people respond to? "What's so friggin' about it."
Keep on posting.
gggpress.blogspot.com/ George Gallo
Although I know my password, when posting my comments, google doesn't accept my password.
Interesting! This might be difficult to do, but I am thinking there is a little adjustment for inflation.
I am looking into comparing Clinton's 'surplus,' GW's record setting deficit, and Obama's new record setting deficit.
Regarding adjustment for inflation; we can not compare the value of the dollar during the Reagan or Carter eras to now.
Boy oh boy, lots of the comments did not agree with your post. I find when people read things, they look for the one thing the disagree with and attack that.
For instance, if I say, "Have a friggin' great day," what do you think people respond to? "What's so friggin' about it."
Keep on posting.
gggpress.blogspot.com/ George Gallo
Although I know my password, when posting my comments, google doesn't accept my password.
Oops! I forgot. GW's deficit did not include the cost of the Iraq war, yes? I am going to check if Obama's does or does not.
Fiscal
Year Year
Ending National Debt Deficit
FY1993 09/30/1993 $4.411488 trillion
FY1994 09/30/1994 $4.692749 trillion $281.26 billion
FY1995 09/29/1995 $4.973982 trillion $281.23 billion
FY1996 09/30/1996 $5.224810 trillion $250.83 billion
FY1997 09/30/1997 $5.413146 trillion $188.34 billion
FY1998 09/30/1998 $5.526193 trillion $113.05 billion
FY1999 09/30/1999 $5.656270 trillion $130.08 billion
FY2000 09/29/2000 $5.674178 trillion $17.91 billion
FY2001 09/28/2001 $5.807463 trillion $133.29 billion
US treasury figures
Go to craigsteiner.us/articles he gives the links and he has done the research to prove clinton did not give us any kind of surplus, in fact the deficit went up every year clinton was president.
Where is all of the money obama is spending coming from? The government has started printing money that is worthless! Our deficit is THREE TIMES HIGHER THAN IT WAS UNDER BUSH AND GOING UP LIKE A METEOR WITH NOTHING TO SHOW FOR IT, ECONOMY STILL SUCKS, NO JOBS,WALL STREET TAKES A NOSE DIVE EVERY TIME obama BAD MOUTHES THE ECONOMY, AND TRYS TO CONVINCE US THAT BANKRUPTING THE COUNTRY IS GOING TO GET US OUT OF THIS MESS THAT THE DEMOCRATS PUT US IN. Have a Nice Day.
Where is all of the money obama is spending coming from? The government has started printing money that is worthless! Our deficit is THREE TIMES HIGHER THAN IT WAS UNDER BUSH AND GOING UP LIKE A METEOR WITH NOTHING TO SHOW FOR IT, ECONOMY STILL SUCKS, NO JOBS,WALL STREET TAKES A NOSE DIVE EVERY TIME obama BAD MOUTHES THE ECONOMY, AND TRYS TO CONVINCE US THAT BANKRUPTING THE COUNTRY IS GOING TO GET US OUT OF THIS MESS THAT THE DEMOCRATS PUT US IN. Have a Nice Day.
@Bob-
Look who is spending so much money now? Almost a trillion dollars? Way to go liberal America.
Who cares how Bill Clinton ended with a Surplus. He did and we were in a much better state when he left office than when Reagan or Bush left.
And what other republicans left office with a deficit or. And Bush tapped into Social Security to pay for the wars.
You know, your tax-increase argument doesn't matter much.
However you put it, Clinton balanced his budgets. He actually made a surplus.
Nobody has claimed clinton magically reduced the deficit. Actually he had quite a good help from the republicans with the Balanced Budget Amendment being passed by the republican majority in 1995.
But all this was done in vain, since Bush never listened to his father in regards to financial matters. The tax reductions combined with massive government spending, countless new anti-terrorist jobs and reckless warfare have reduced the US to second place in the world, after China...
I, of course, a newcomer to this blog, but the author does not agree
you republicans always complain about tax increase but you never complain about all the wage gains and price in creases during that same time go back and look at what a disaster reagan and bush I were if they hadn't shoved that big tax increase down bushes throat the economy would have been a complete disaster. the clinton came in and raised the taxes properly on those that can most afford it. do you know why in the wealthy need to pay agreater portion of their gains than middle class people???? because when yo have such a large cap between rich and poor eventually you will have choas
How is 3.75% APR a Dramatic Spending increase?
Thats less than inflation.
Looking at your numbers...
When Clinton had a Democratic controlled congress
the average APR spending increase was 2.87%
then under a Republican controlled congress the
average APR spending increase was 3.43%
Thats a 19.3% increase in spending under the Republican controlled congress.
Your right he didn't really CREATE a balanced budget, key word CREATE. The budget surplus was a result of Geoge Bush SR who infamously raised taxes mid term and lost to yours truly (Billy C) the next election. But Clinton realizes he fell into a great political gold mine in that he didn't have to do anything to win people over except let the good times roll. The tech boom of the late 90's and the massive tax surplus from GW Sr's tax codes provided more than enough to cover his spending. BUT what did Bill Clinton do instead? How bout repeal Glass/Steagal, De-regulate the Mortgate industry, De-regulate the SEC, expand NAFTA, and everyone forgets that we were in 3 WARS while Bill Clinton was in office! WHAT? NEVER! NOT BILLY. Hindsight is never 20/20.
Very poor and biased argument.
The problem with this article is that it does not adjust for inflation. If you have good economic growth of around 3% per yer, over 8 years that will translate into a total of about 27% inflation. So adjusting for inflation, under the Clinton Presidency spending increased by only about 2%.
The article also doesn't mention that the revenue also came from the wealth that Reagan had created in a robust economy... Clinton inherited the residuals of Reagan's fantastic jobs creation and revenue creating economy! That simple!
Thanks for your comparison. It makes a lot of sense now in 2012. After the Bush tax cuts, we saw deficit spending like we had never seen before. Then two wars on top of it. No wonder we have a 16 trillion dollar deficit now. Obama keeps trying to cut taxes on the poor and raise them on the rich but Republicans block him.
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