Remarks on Departure for the Capitol and an Exchange With Reporters

Weekly Compilation of Presidential Documents, Nov 1, 1999

October 27, 1999

Debt Reduction

The President. Good afternoon. Nearly 7 years ago, at a time of economic distress, social division, and political drift, we set out on a course to put America's fiscal house in order with an economic strategy rooted in common sense and common values, committed to bringing down the deficit, investing more in people, and expanding trade.

With the historic 1993 economic plan and the 1997 Balanced Budget Act, we made the tough choices to reduce the deficit and balance the budget the right way. Year-in and year-out, we have resisted politically attractive but economically unwise tax cuts that would have abandoned this commitment and taken us in the wrong direction. It hasn't been easy, and all along the way many said our approach wouldn't work. Some Members of Congress who, in 1993, took the courageous stand for our future even lost their seats as a result of what they did.

But this economic strategy has paid off. We have the longest peacetime expansion in history, 19 1/2 million new jobs, the lowest unemployment rate in 29 years, the lowest welfare rates in 30 years, the lowest poverty rates in 20 years, the highest homeownership in history.

America has now enjoyed 7 consecutive years of fiscal improvement and economic growth, withstanding along the way the Asian financial crisis and helping to bring the world back toward prosperity. Now we have further evidence that our economic plan is working.

Today the Department of the Treasury and the Office of Management and Budget are releasing the financial totals for the fiscal year that just ended. It is now official, and I'm proud to announce that we posted a budget surplus of $123 billion, the largest surplus in American history.

And in the last 2 years alone, we have paid down our Nation's debt by $140 billion, the largest debt reduction in our Nation's history. We have closed the book on deficits and opened the door on a new era of economic opportunity. These new numbers also show that last year we came within $1 billion of balancing the budget without using the Social Security surplus, for the first time in decades.

Unfortunately, this year's Republican budget reverses that course, spending about $18 billion from the Social Security surplus, according to estimates from the Congressional Budget Office. That is wrong, and it doesn't have to be. Congress should pass the plan I submitted that meets our priorities, doesn't rely on the Social Security surplus, and continues our aggressive efforts to pay down the debt.

According to today's report, America's debt is now $1.7 trillion lower than it was projected to be when I took office. What does that mean? For America it means lower interest payments on our debt and lower interest costs across-the-board. Last year the Government paid $91 billion less in interest than was projected in 1993, creating a virtuous cycle that boosted the budget surplus and further reduced the debt.

For American business, debt reduction means that the Government is borrowing less, so there's more capital for business to invest at more modest prices. As a result, investments in technology, in particular, have boomed, bringing greater productivity, more jobs, higher wages.

The best story is perhaps what it means for working families. That's what the chart to my left shows. Debt reduction means lower interest rates and more money. It means $2,000 less in home mortgage payments for the typical family. It means $200 less in car payments and $200 less in college loan payments. Debt reduction really means a tax cut and a sizable one for America's families. It proves that putting our fiscal house in order helps every American household.

Now, in spite of our progress, the congressional majority has continued to try to take us off this path, first with an irresponsible tax plan that I vetoed and then with a budget that fails to live up to our values and our interest for the future. Even without their tax cut--can you just imagine the fix we'd be in if that tax cut had become law? Even without their tax cut, they are set to spend several billion dollars of this year's Social Security surplus, while trying to disguise it with gimmicks. They are even set to enact an across-the-board spending cut that would have a destructive impact on our efforts to educate our children, protect our environment, and modernize our military. Even with all this, they would not extend the solvency of Social Security or Medicare by one single day.

That is why, yesterday, I sent legislation to Capitol Hill that would ensure that all the Social Security surplus goes to debt reduction. And just like when a family cuts its debt, this will result in lower interest payments for the Government. I have also proposed, therefore, that we use these interest savings from Social Security surplus contributions to our debt reduction to extend the life of Social Security until the year 2050, which will encompass the life span of most of the baby boomers.

Now, we can do this and still have a budget that puts 100,000 teachers in the classroom, 50,000 police on the street, provides real protection for our environment, strengthen and modernizes Medicare, and keeps us on track to becoming debt-free for the first time since 1835.