[Congressional Record Volume 142, Number 104 (Tuesday, July 16, 1996)]
[Senate]
[Pages S7880-S7882]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




             FEDERAL BUDGET DEFICIT UNDER PRESIDENT CLINTON

  Mr. CONRAD. Mr. President, I was interested to hear my colleague from 
New Mexico, the chairman of the Budget Committee, attempting to rewrite 
history with respect to what has happened to the Federal budget deficit 
under this President. Now, a lot can be said about the Federal budget, 
about deficits, and the growth of the debt, but the record of this 
President is really quite clear.
  This President came into office promising that he would cut the 
deficit in half during his first 4-year term, and today we did get the 
results of what is likely to occur in those first 4 years. We heard 
from the Congressional Budget Office that the deficit this year is 
likely to be in the range of $115 billion to $130 billion.
  Mr. President, when Bill Clinton came into office, he inherited a 
deficit of $290 billion. He pledged to cut that in half in his first 4 
years. That would be a deficit of $145 billion. Today, the 
Congressional Budget Office--not the President's Office of Management 
and Budget, not the budget committees, but the bipartisan Congressional 
Budget Office, the head of it, June O'Neill--sent a letter to John 
Kasich, chairman of the House Budget Committee, saying:

       At this point, a preliminary analysis of actual receipts 
     and outlays through May and our estimates for June receipts 
     and outlays suggests the 1996 deficit will be somewhere in 
     the range of $115 billion to $130 billion.

  I ask unanimous consent to have this letter printed in the Record.
  There being no objection, the letter was ordered to be printed in the 
Record, as follows:

                                                    U.S. Congress,


                                   Congressional Budget Office

                                    Washington, DC. July 16, 1996.
     Hon. John R. Kasich,
     Chairman, Committee on the Budget, House of Representatives, 
         Washington, DC.
       Dear Mr. Chairman: This letter is in response to your July 
     11 request for our current estimate of the fiscal year 1996 
     deficit. Over the next several weeks, we will be reviewing 
     carefully our budget estimates for 1996 in preparation for 
     our summer economic and budget outlook update report that 
     will be published in mid-August. At this point, a preliminary 
     analysis of actual receipts and outlays through May and our 
     estimates for June receipts and outlays suggests that the 
     1996 deficit will be somewhere in the range of $115 billion 
     to $130 billion. Receipts are likely to be $20 billion to $25 
     billion higher than the level we estimated for our May 
     economic and budget outlook report, and outlays could be $5 
     billion higher or lower than our May estimate.
       As always, there is uncertainty about tax collections and 
     spending for various programs, but two sources of uncertainty 
     stand out this year. First, we are uncertain about the amount 
     of offsetting receipts that will be credited to 1996 for the 
     spectrum auctions. The uncertainty arises from two sources: 
     (1) the timing of the FCC resolution of various petitions to 
     deny the results of the auctions, and the issuance of 
     promissory notes to the C-block licensees; and (2) whether 
     the results will be recorded on a cash or credit reform basis 
     in the monthly Treasury statements. The CBO and OMB estimates 
     for the C-block auctions are on a credit reform basis, but 
     the monthly Treasury statements may report the receipts from 
     this auction on a cash basis. The possible range for spectrum 
     auction receipts for 1996 is on the order of $5 billion.
       Second, we are uncertain about the effects of the delay in 
     the enactment of 1996 appropriations and the temporary 
     shutdown of government activities earlier in the fiscal year. 
     First quarter outlays were at least $15 billion lower than we 
     would have expected for the level of enacted appropriations, 
     and we don't know how much of this lower-than-expected 
     spending will be made up before the close of the fiscal year.
       Even with nine months of actual and estimated data, there 
     is always some uncertainty about the final budget outcomes. 
     Very small differences in rates of spending or tax 
     collections can have large effects on the deficit when the 
     total amounts of outlays and receipts involved are $1.5 
     trillion. Each 0.1 percentage estimating error in the rate of 
     spending or tax collections would amount to about $1.5 
     billion. Over the past 15 years, the average absolute CBO 
     percentage estimating errors in our summer economic and 
     budget outlook update reports for the current fiscal year 
     have been 0.4 percent for receipts and 0.7 percent for 
     outlays. On this basis, a $15 billion estimating range for 
     the 1996 deficit at this point in time is not out of line 
     with CBO's past experience.
       I look forward to providing a more detailed analysis in 
     August, but I hope that this information is helpful until 
     then.
            Sincerely,
                                                     James L. Blum
                                  (For June E. O'Neill, Director).

  Mr. CONRAD. Mr. President, whatever else one can say, this President 
has delivered on his promise to cut the budget deficit in half. In 
fact, he has more than delivered on his promise. I listened with great 
interest to my colleague, the chairman of the Senate Budget Committee. 
I respect and admire Senator Domenici, but I must say, facts are facts, 
the record is the record. The record of this administration and this 
President with respect to deficit reduction is clear and unassailable. 
This President said he would cut the budget deficit in half. He has cut 
the budget deficit in half.
  If we compare his record to the record of his immediate predecessors, 
he can be especially proud of what he has accomplished. The fact is, as 
this chart demonstrates, this is what has happened under the previous 
three Presidents. President Reagan came in and inherited a deficit of 
about $60 billion. Under his leadership, those deficits skyrocketed. In 
fact, they were tripled until they were up in a range of $220 billion. 
At the end of his term, we saw some reduction, back to the range of 
$150 billion. Then, under the new administration, the administration of 
President Bush, the deficits again took off. They took off like a 
scalded cat. What we saw was record deficits. In fact, in the last year 
of the Bush administration, the budget deficit reached an all-time high 
of $290 billion.
  President Clinton took office and in each year--in each succeeding 
year for now 4 years in a row--we have seen a reduction in the budget 
deficits, a substantial reduction. As I indicated, the head of the 
Congressional Budget Office, June O'Neill, has said in a letter dated 
today that she anticipates the deficit will be $115 to $130 billion 
this year. That is even better than this chart shows, because this 
chart indicates the last estimates we had. That indicated the deficit 
would come in at about $145 billion this year. That, too, would have 
kept the President's promise of cutting the deficit in half. The news 
today is even better, suggesting the deficit will be about down here 
with respect to this chart, a very steep decline. Four years in a row 
of deficit reduction under this President, for the first time in any 
administration since the 1840's. Let me repeat that. Not the 1940's; 
this is the first administration since the 1840's that has delivered 4 
years in a row of deficit reduction.
  Not only did the President deliver on his promise of deficit 
reduction, he also delivered on his promise of creating jobs in this 
country. He promised 8 million jobs. We have now had more than 10 
million created in the 3\1/2\ years of this administration.
  The President did not stop there. He also promised to reduce the 
Federal payroll by 100,000. The most recent numbers indicate that he 
has reduced the Federal work force by 230,000.
  So, in each of these areas where this President made a direct promise 
to the American people of what he would achieve, that is what has 
happened. Deficit reduction; he said he would cut it by 50 percent. He 
has cut the deficit by 60 percent. The President said he would be part 
of an administration that would have a strategy that would create 8 
million new jobs. They have created over 10 million new jobs in the 
3\1/2\ years of this administration. The President said he would reduce 
the Federal payroll by 100,000. He has reduced the Federal payroll by 
nearly a quarter of a million, 230,000.
  I think it is important, when we have these political debates, that 
we be direct and clear with the American people as to what has 
happened. The fact is, the Clinton record on deficits is an admirable 
one. The Senator from New Mexico may quibble about how he has achieved 
it, but there can be no question about the results. The deficit this 
year, the Congressional Budget Office says, will be between $115 and 
$130 billion. That is a dramatic improvement

[[Page S7881]]

for this country. In fact, measured against the size of our economy, 
these are the smallest deficits in over 20 years, as measured by the 
share of our economy.

  We now anticipate that the deficit this year will be 1.6 percent of 
the size of our economy, lower than any year since 1974. In fact, we 
now have the smallest deficits of any major economy in the world as a 
share of our gross domestic product.
  In 1992, the last year of the Bush administration, the United States 
had a larger budget deficit as a share of the economy than Japan, 
Germany and France. In fact, we can all remember that we were 
embarrassed when we went to the international meetings on the economy 
and were on the defensive because of the size of our budget deficits. 
This year, when our President went to the international meetings of the 
economic leaders of the major industrialized countries, the United 
States was in the best position of any of the major economies in the 
world. This President was able to proudly say that we had not only cut 
our deficit in half in dollar terms, but we had reduced the deficit 
even more significantly when measured against the size of the economy.
  This chart demonstrates what I am talking about with respect to the 
deficit as measured as a percentage of the gross domestic product, or, 
put perhaps more understandably, as measured against the size of our 
economy. President Reagan came in and inherited a budget deficit that 
was just below 3 percent, in terms measured against the size of our 
entire economy. During the Reagan years the deficits absolutely 
skyrocketed up to over 6 percent of the size of our economy. They saw a 
reduction back down to over 3 percent when President Bush took over and 
then, once again, they took off. They took off to a level of about 5 
percent, deficits that were running 5 percent of our gross domestic 
product.
  Under President Clinton, the deficit, as measured against the size of 
our economy, has gone down each and every year. This chart shows it at 
under 2 percent. The news today is even better than that. It indicates 
that the deficit this year, as measured against the size of our 
economy, will be about 1.6 percent, somewhere right in here on the 
chart. Those are the facts.
  I do not mind criticism of this President or any other President with 
respect to their record. But this is the Clinton record, and this is 
the record of the previous Presidents--President Reagan and President 
Bush. They were the kings of deficits. We had the larger deficits, 
historically, under those Republican administrations. I might add, 
Republicans also controlled the Senate from 1980 to 1986. Those are the 
years when the deficits absolutely skyrocketed out of control. 
Interestingly enough, it is when we had President Clinton and 
Democratic control of the Senate and Democratic control of the House of 
Representatives that we saw the sharpest reduction in the budget 
deficit in this period.
  This chart follows three Presidents, two Republicans, one Democrat. 
This is a period in which the Republicans controlled the U.S. Senate 
for 6 years.
  This is a time when Democrats, for 2 years, controlled the 
Presidency, the Senate of the United States and the House 
of Representatives. During that period we finally got on a course of 
dramatic reduction of the budget deficits, whether we measure it in 
dollar terms or measure it against the size of the economy. In either 
case, we saw dramatic progress.

  Those are the facts. No chart that shows how the deficits were 
reduced, how they were produced, can change the hard reality and the 
hard fact that this President delivered on his promise, that this 
President has produced 4 years in a row of deficit reduction, the best 
record of any administration for over 150 years. That is the reality, 
and this President deserves the credit. I might also add this President 
is the first one in 17 years to submit a Congressional Budget Office-
certified balanced budget.
  My friends on the other side of the aisle are quick to claim credit 
for the deficit reduction which has occurred. I remind them that none 
of their plans would balance without the plan that passed in 1993 with 
only Democratic votes in this Chamber and in the other Chamber and with 
the support of this President. Not a single Republican voted for that 
deficit reduction plan that put us on this path.
  Talk is cheap. It is tough to actually cast the votes that lead to 
this result. This result is clear, and this result is important to the 
economic future of this country.
  The other point I think needs to be made is the suggestion by the 
Senator from New Mexico that this has only occurred because of tax 
increases. I say to my colleague, he may have forgotten that the 1993 
budget plan that passed here not only had tax increases, tax increases 
that were aimed at the wealthiest 1 percent in this country, but also 
substantial spending cuts. And, again, the record is clear.
  If we look at spending as a share of the gross domestic product, we 
saw that spending under President Bush increased from 22.1 percent of 
the gross domestic product to 23.3 percent.
  Under this administration, spending as a share of the economy has 
declined from that 23.3 to 21.7 percent, and that takes us to a lower 
level than at any time during the previous two administrations.
  That might come as a surprise and a shock to some who want to portray 
the Democrats as the spenders. The fact is, the Democrats, in the plan 
that they passed in 1993, not only reduced the deficit but also reduced 
spending as a share of our national economy to the lowest level that we 
have had in the last three administrations, down from 23.3 percent of 
our national economy to 21.7 percent of our national economy today--the 
lowest spending level in the last three administrations.
  Mr. President, we can debate a lot of things, but the record with 
respect to deficits is clear. In the previous administrations, headed 
by President Reagan and President Bush, the deficit skyrocketed, the 
highest deficits we have ever had in our history. Under the 
administration of President Clinton, the deficit has been cut by 60 
percent, exceeding his stated goal of a 50-percent reduction. It has 
also reached the lowest level measured against the size of our economy 
in 20 years, and this is the first administration since the 1840's that 
has delivered 4 years in a row deficit reduction.
  There is no way, I say to my colleagues on the other side, to rewrite 
the history of what has occurred here. You can show all the charts, 
make all the caveats, try to score all the political points one wants 
to try to score. It is not going to change the reality and the facts. 
The fact is, the reality is that this administration has delivered on 
its promise, and the result is we have a much stronger economy than we 
would otherwise have.
  Let me just conclude by saying that there was an element to the 
remarks of my colleague from New Mexico, with which I strongly agree: 
The job is not yet finished, and it is in our collective interests and 
in our national interest to finish this job.
  What does it mean? I was proud earlier this year to be part of a 
centrist coalition, 20 Senators, about evenly divided between Democrats 
and Republicans, that presented a plan to make further progress to move 
us toward a balanced budget to continue to reduce these deficits and to 
get the job done.
  Mr. President, the Senator from New Mexico said we continue to face a 
significant challenge, even as we have seen these deficits come down. 
The fact is, if we look over the horizon at what is to come, we all 
understand that it is critically important that we stay on this course 
of deficit reduction. I think every responsible Member of this Chamber 
knows that there is much more to be done, because we face in the future 
a demographic time bomb, and that is the baby boom generation. When the 
baby boomers start to retire, the number of people eligible for our 
very basic social programs is going to double in very short order, from 
24 million today to 48 million by the time the baby boomers have fully 
retired.

  Mr. President, that ought to send a warning signal to all of us that 
while there has been significant progress, there is much more that 
needs to be done. I hope that can be done in a bipartisan effort, 
unlike 1993 when no Republicans came forward, stood up and were willing 
to vote to reduce the deficit. It is going to require that we work 
together so that we can keep this process underway and so that we can 
achieve the ultimate result of balancing the Federal budget to avoid

[[Page S7882]]

leaving an enormous burden to our children and grandchildren.
  I thank the Chair and yield the floor.

                          ____________________