Clinton's budget balanced on backs of taxpayers

Human Events, Mar 6, 1998 by Bartlett, Bruce

When President Bill Clinton recently presented his budget for fiscal year 1999, which begins on October I, he pointed with great pride to the projection of a balanced budget next year, the first since 1969. Following are some points Clinton chose not to emphasize:

Higher federal taxes account for half of the decline in the deficit. In fiscal year 1992, federal revenues consumed 17.8% of gross domestic product (GDP), according to the Office of Management and Budget (OMB).

In 1999, federal taxes are expected to eat up 20.1% of GDP, an increase of 2.3%. With GDP estimated to be $8.8 trillion next year, this means Americans will be paying an additional $200 billion more in federal taxes than they would if they remained at their pre-Clinton percentage of GDP.

To his credit, Clinton has also reduced spending significantly. Federal outlays in 1999 will have fallen from 22.5% of GDP in 1992 to 20%.

However, three-quarters of this decline is due solely to lower defense spending, which will have fallen from 4.9% of GDP in 1992 to 3. 1% next year. Most of the rest of the decline results from lower interest payments.

Domestic spending, both discretionary and entitlements, has been virtually untouched. Domestic discretionary spending was 3.5% of GDP in 1992 and is estimated at 3.2% in 1999. Entitlements were 11.2% of GDP in 1992 and will be 11.1% next year.

In short, the budget has been balanced almost entirely on the backs of taxpayers and at the expense of our national security.

Heavy Cuts in Defense Procurement and Research

Although a sharp cut in defense spending was justified by the fall of the Soviet Union, the Clinton Administration has cut disproportionately into the "investment" side of the defense budget: procurement and research and development. Real procurement spending has dropped about 50% in real terms during the Clinton's Administration. Thus, by early next century, some 70% of all military aircraft will be more than 40 years old.

By contrast, the administration has cut far less out of the "consumption" portion of the defense budget: personnel and operations and maintenance. Indeed, his foreign adventures in Haiti and Bosnia forced larger cuts in procurement than initially planned. Thus, as defense expert Loren Thompson of the Alexis de Tocqueville Institution notes, it is ironic that an administration that came into office preaching long-term investment has consistently sacrificed investment in defense to maintain consumption.

It is too soon to say what price we will pay for Clinton's shift in budgetary priorities. But it is worth noting that the nation's last balanced budget was closely followed by a sharp recession.

Mr. Bartlett, a nationally syndicated columnist. is a senior fellow at the National Center for Policy Analysis.