Letter: It’s worth recalling how Clinton achieved a budget surplus

As reported on the front page of the FT (April 18), the IMF predicts a US fiscal deficit of 7.1 per cent next year, “more than three times the 2 per cent average for other advanced economies”.

The US Congressional Budget Office meanwhile announced that US federal debt now equalled 97 per cent of gross domestic product and would probably reach 116 per cent in 2029.

Not since the Clinton administration has the US federal government enjoyed a budget surplus. When Bill Clinton was elected in 1992, the US federal budget had been in deficit for over 30 years. As history records, Clinton took note and appointed his vice-president, Al Gore, to head a group of 250 career civil servants in a “national performance review” to investigate the workings of federal agencies and create a government “that works better and costs less”.

Gore’s review was released in September 1993. By the end of that year, Clinton had cut federal regulations in half and the federal workforce by 252,000, and a Democratic Congress had passed significant tax increases on corporations and high-income individuals. On account of these spending cuts and new taxes, the federal deficit had fallen below 1 per cent by the end of Clinton’s first term, before converting into a surplus during his entire second term.

Hopefully, between now and the November 11 US elections, one of the pending presidential candidates will promise to initiate his own national performance review, including a willingness to consider tax increases if spending cuts do not suffice to bring the US budget back into surplus.

Such tax increases would be more palatable if accompanied by a genuine simplification of today’s mind-bogglingly complex federal income tax system.

William W Chip
Washington, DC, US