March 4, 1997

CBO Puts Clinton Deficit at $69 Billion

"I would present a five-year plan to balance the budget."

(Bill Clinton, Larry King Live, June 4, 1992)

America must have misunderstood. Evidently what Bill Clinton meant five years ago was that he would plan for five years to balance the budget -- but never do it. At least that's the way it has worked out. Every year he has been in office, President Clinton has submitted a budget that does not balance. According to the Congressional Budget Office (CBO), Clinton's FY 1998 budget leaves a deficit of $69 billion in 2002. It's time for him to admit that there's only one way to achieve true, lasting balance -- a balanced budget constitutional amendment.

Instead of doing what it takes to balance the budget, the White House did what it took to increase spending. According to CBO, President Clinton's latest budget spends nine trillion dollars over the next five years -- $132 billion more than the White House admitted to. In order to hide this fact, the White House budgeteers produced favorable economic assumptions and a gimmicky automatic-spending-reduction mechanism that they claimed would allow for more spending and still balance. When these are stripped away, as CBO has done, we are left with a budget that leaves the deficit higher than last year's $107 billion for the next four years.

In the last Congress, after shutting down the government and vetoing the first balanced budget bill since 1969, President Clinton promised three things: To balance the budget, to balance the budget by 2002, and to balance the budget by 2002 using CBO's numbers. With his latest budget, he has not kept even one of those three promises.

• Clinton's budget spends $9.119 trillion over the next five years.
• In its first year, Clinton's budget increases the deficit $38 billion above last year's, $30 billion above the estimate of this year's, and $24 billion above the estimate of next year's.
• Clinton's budget leaves a $69 billion deficit in 2002 and adds $586 billion in deficit spending over the next five years.
• 98.5 percent of the deficit reduction occurs after Clinton leaves office. In fact, under Clinton's latest budget deficits will not go below last year's deficit ($107 billion) or even below $100 billion until 2001 (when it will reach $95 billion).
• During his term, Clinton's budget reduces the deficit just $1 billion from CBO's currently projected levels.
• Clinton's budget only eliminates 35% of last year's $107 billion deficit from 1998-2002.

More Spending = More Deficits

• President Clinton's budget will spend $9.119 trillion over the next five years. That is $132.2 billion more than the White House admitted to when they released it.
• To hide that spending, the Administration relied on favorable assumptions, one-time savings, and a gimmick providing that all but $1 billion -- 98.5 percent -- of the necessary deficit reduction will be made in the next century -- and by another President.
• As CBO demonstrates, without these devices, there is no balance, only more deficits -- $69 billion in 2002, and $586 billion over five years; the deficit even increases over what it was projected to be both this year ($116 billion vs. $115 billion) and next year ($145 billion vs. $121 billion).
• Clinton's budget leaves spending higher throughout his final term than it was last year -- in 2000 the deficit would be $137 billion vs. $107 billion in 1996. During his last term, Clinton's budget would add $110 billion in additional deficits on top of last year's $107 billion deficit: $116 billion in 1997, $145 billion in 1998, $142 billion in 1999, and $135 billion in 2000 -- $28 billion higher in Clinton's last year than last year's deficit.
• Under Clinton's budget, the deficit will not go below last year's $107 billion level until the next century and the next President -- when it hit $95 billion in 2001.

Hiding these Deficits Behind Phony Assumptions Won't Work

• Despite OMB's best efforts of optimistic obfuscation, CBO stripped away the gimmicks. While Clinton recognized CBO as its official estimator last year, CBO now states: interest rates (10-year Treasury rates: 5.5% vs. 5.1%), inflation (CPI-U: 3.0% vs. 2.7%), and unemployment (Civilian Unemployment: 6.0% vs. 5.5%) will all be higher and GDP lower (Real GDP Change: 2.3% vs. 2.1%) in 2002 than Clinton forecast.

• According to CBO, one-time asset sales -- like selling part of the electromagnetic spectrum, which can only be sold once and therefore reduce spending just once -- will bring in less than the President claims (for the spectrum, $11 billion less in 2002).
• After increasing the deficit to $135 billion over the next four years, Clinton then claims to eliminate it in the next President's first two with a so-called trigger mechanism that would reduce spending he increased and end the tax cut he barely delivered (just $18 billion from FY97-02, according to the Joint Tax Committee).