February 11, 1997

President Clinton's budget approach is circular: Its increased spending leads to deficits above last year's in each of its first three years -- meaning it won't balance in 2002. Knowing this, he included a "trigger," to cut off the tax cuts after three years and decrease the spending just increased. Thus, his tax package becomes a $22.3 billion tax hike, with no room for tax cuts.

New Goal: Balance by 2002 -- President Clinton only now accepts a balanced budget.

• Clinton's own budgets projected final-year deficits of $241.4 billion (his FY 1994 budget), $201.2 billion (his FY95 budget), and $194 billion (FY96 budget), until finally trying to claim balance in last year's election.
• CBO estimated the deficits to be even higher, at $228.5 billion, $206.2 billion, $276 billion, and $81 billion, respectively.

Increased Spending -- Clinton ostensibly agrees to the need for a balanced budget while stubbornly adhering to the liberal spending that prevents it.

• Net spending savings amount to just $222.6 billion -- that's half of the $446 billion from the same period last year. Total federal outlays increase by $827 billion with $60 billion in new entitlements over the next five years.
• Clinton's five-year request for discretionary outlays is $131.8 billion higher than his five-year request of last year.
• Increased welfare spending amounts to $22 billion overall (including $18 billion for noncitizens) -- wiping out 40 percent of the total welfare-reform savings from last year.

Increased Near-Term Deficits, Enduring Long-Term Deficits -- Increased spending means decreased savings, which translates into increased deficits in the near-term and enduring deficits in the long-term, despite optimistic assumptions to try and hide them.

• Clinton's total estimated savings are $189 billion less than those for the same period in his last year's budget -- only $252 billion compared to $441 billion in last year's budget.
• Clinton claims to achieve balance by assuming an increase in revenue receipts of $1.107 trillion -- almost $100 billion higher than he estimated receipts just one year ago.
• He also starts from a much rosier fiscal scenario than will Congress. In 2002, he estimates that the deficit will be $65.8 billion less than does CBO.
• Overall Clinton estimates $190 billion in lower deficits than does CBO. That estimate, of

course, lowers the amount of real deficit reduction he will have to accomplish.

• Furthermore, Clinton is passing the buck by proposing 75 percent of his savings in the last two years of his budget -- after he has left office.
• Discretionary savings account for $137.4 billion -- 62 percent of the total spending savings, and 55 percent of the total savings -- a spending area he proposed increasing by $131.8 billion in his budget last year.
• According to Clinton's budget, the deficit would be above 1996's $107 billion: in 1997, $125.6 billion; in 1998, $120.6 billion; and in 1999, $117.4 billion.

Gimmicks: Triggers Will End Tax Cuts and Spending -- Because new spending leaves enduring deficits, Clinton uses gimmicks like a cost shift ($82 billion to claim Medicare solvency), and phony savings from payment shifts ($3 billion in retiree benefits), one-time asset sales ($36 billion from spectrum), and disappearing spending programs (such as the health insurance program for unemployed that drops from $9.8 billion through 2001 to $0 in 2002).

• However, most egregious is the cut of tax cuts and an across-the-board reduction in spending (except Social Security) after 2000 -- equaling 2.25 percent -- via a "trigger."
• The budget continues to rely on "triggers," leaving to future presidents and congresses the responsibility of slashing spending and ending tax breaks in order to achieve balance.

Tax Hikes -- Even though Clinton has been promising a middle-class tax cut since he came to office, he still fails to deliver. In fact, his tax cut becomes a tax hike if his "trigger" mechanism -- which would cut off his tax decreases -- works like it did in his last year's budget.

• Clinton claims $98.4 billion in tax cuts that will miss most Americans. However, he also includes tax hikes of $76 billion.
• That would appear to "net" down to a $22.4 billion tax cut, UNTIL you take into account

his "trigger" mechanism that is supposed to ensure balance. If it works like last year, it ends all his tax cuts in the last two years of his budget -- including virtually all of those he identifies for the middle class. That makes theirs just a temporary, three-year tax cut.

• The "disappearing" tax cuts of the last two years amount to $44.7 billion: the minuscule $22.4 billion tax cut becomes a $22.3 billion tax hike when the trigger is added.
• That tax hike offsets the $22 billion in increased welfare spending that Clinton is

requesting -- of which $18 billion is for noncitizens.