The past two "Budget Battles" have reviewed many of the quantifiable budget aspects of the Clinton years. But a bit more number crunching has to be done before judgments can be made as to who should get credit. The fact that only 30 percent of the improved budget outlook is the result of legislation is really not that surprising.
The key figure to remember is this: Only about 30 percent of the total deficit reduction/surplus increase that occurred between 1994 and 1999 (the six fiscal years starting with the first budget submitted to Congress by President Clinton that have been completed) can be attributed to legislative changes. Extending the same type of analysis to projections for the last two fiscal years of the Clinton administration shows the amount of deficit reduction/surplus increases attributed to legislation is getting smaller - to no more than 25 percent.
The remaining reductions in the deficit and increases in the surplus have occurred either because of the continued economic good times or because of what budget analysts call "technical" changes. Technical changes occur for many reasons, such as updates of previous estimates or better program administration. But the revised numbers do not result from enacted legislation, and therefore cannot be attributed to anyone.
It is safe to conclude that the extraordinary and unexpected improvement in the deficit outlook seen since 1994 should not primarily be attributed to efforts initiated by either the Clinton administration or Congress. The gains were far more fortuitous than planned and happened more because of the still growing economy, of changes in the way taxpayers earn their income, of fewer people applying for benefits for some programs, or because some costs turned out to be lower than originally anticipated.
For the sake of argument I will give the Clinton administration credit for the 1993 budget agreement, which passed without a single Republican vote, and give Congress credit for the 1995 budget agreement, which probably would not have occurred had it not been for the 1994 election results that produced Republican majorities.
It is important to keep in mind, however, that those two deals plus any other legislation enacted during the Clinton years still account for only about 30 percent of the total deficit reduction or surplus increase.
There are arguments about who should get credit for the better-than-expected economy and, therefore, who should get credit for the deficit reductions/surplus increases associated with it. The White House would have been blamed if the economy faltered, so symmetry alone indicates that the administration should get at least some of the praise. And former Treasury Secretary Robert Rubin certainly deserves credit for what many believe was a masterful job.
Then again, it might have been Wall Street's and the Federal Reserve Board's belief that a Clinton presidency combined with a Republican-controlled Congress meant few deficit increases would be enacted. That kept interest rates relatively low over the period and provided much of the fuel for the continued economic expansion that lowered the deficit so dramatically.
Or perhaps the Republican-controlled Congress deserves credit for making sure that the Clinton administration did not achieve much of what it wanted, creating the stalemate of which Wall Street and Alan Greenspan were so enamored. Then again, doesn't the Clinton administration deserve at least some credit for stopping Congress's budget excesses as well?
The fact that only 30 percent of the improved budget outlook is the result of legislation is really not that surprising. The biggest deficit reductions that were planned in 1997 were not intended to go into effect until fiscal 2001-2002, so none of those reductions has yet occurred. Nor, for that matter, will they.
The White House and Congress have now abandoned the increasingly tighter caps on appropriations agreed to in 1997 that would have produced the deficit reductions. Instead, legislation was enacted to greatly increase the spending on highways, mass transit and aviation. President Clinton and Congress are both pushing for increases for the Pentagon and education, among other things. And a few small revenue reductions, such as the elimination of the federal telephone excise tax, could be agreed to this year.
All of these lead to the conclusion that, in spite of the very positive change in the deficit/surplus outlook during the Clinton administration, budget historians may very well look back at an extraordinary missed opportunity to have done more. If the caps had been maintained and if the better-than-expected economy had not produced the big surpluses, then instead of the spending increases that emanated from both Congress and the White House, additional legislation that made permanent changes in federal spending and taxing might have been enacted. And the country's longer-term fiscal health might have been improved much more.
Question Of The Week
Last Week's Question. "Budget Battles" readers responded enthusiastically for the call for budget sound bites that an historian might use to describe the Clinton years. The most frequent suggestion was some variation on "Show me the money!" The "I Won A Budget Battle" T-shirt goes to Kim Love, who works in the Washington office of Rep. Debbie Stabenow, D-Mich., for "Hasta la vista, deficit!"
This Week's Question. Here is a question for the wonks and would-be wonks who want an "I Won A Budget Battle" T-shirt. The question: The House and Senate use the 302(b) allocations to determine whether an appropriation bill complies with the budget resolution. Who determines the 302(b) allocations for each appropriation bill? The winner will be selected by random drawing if there is more than one correct response. Send your response to scollender@nationaljournal.com by 5 p.m. EDT on Saturday, June 17. Please include your address so that the shirt can be mailed to you if you win.