The higher taxes invited pushback from Republicans, who gained majorities in the House and Senate in 1995. That’s the smallest it had been in 22 years. These measures helped slash the overall deficit to 1.3% of GDP by the end of Clinton’s first term. On the spending side, Clinton took advantage of the “ peace dividend” that followed the collapse of the Soviet Union to reduce defense spending from 4.3% of GDP in 1993 to 2.9% by 2000. He introduced higher top personal income tax brackets, raised corporate taxes, increased taxes on Social Security benefits, added 4.3 cents per gallon onto gas taxes and eliminated a number of itemized tax deductions. In his second term, he also negotiated a bipartisan budget deal with Republicans.Īfter campaigning on a pledge to cut the deficit, Clinton raised taxes on the wealthy during his first year in office. When Clinton took office in 1993, the budget deficit in the previous year was just under 5% of gross domestic product, and the nonpartisan Congressional Budget Office predicted a bleak fiscal outlook.Ĭlinton’s balanced-budget recipe was a mixture of higher revenues and lower spending, with help from a booming economy. A quick look back at how we did it, along with how much has changed, shows that Republicans are unlikely to manage a similar performance. Johnson managed to do it in 1969, and President Bill Clinton created a surplus that ran from the fiscal years 1998 to 2001, when he left office.Īs a member of the Clinton administration in the Commerce Department from 1997 to 2001, I participated in achieving that rare balanced budget and understand the obstacles to delivering a repeat performance. has managed this feat only twice in the past 60 years – and both times involved raising taxes, something Republicans are loath to do. at risk of default.īut a look at the numbers – and the history – shows just how difficult balancing the budget will be.ĭoing so requires the federal government to generate enough income to pay for all its spending. One of them was a “balanced budget” in 10 years.Īs part of that plan, Republicans are demanding substantial spending cuts and budget reforms in exchange for lifting the debt ceiling this year – putting the U.S. Kevin McCarthy reportedly promised many things to Republican hardliners en route to clinching his job as speaker of the U.S.
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