Budget proposal uses surplus to good effect

President Clinton presented his budget proposal on Monday, based upon economic projections for the next 15 years. With the projected federal budget surplus, he has wisely prioritized the elimination of the federal government’s debt and an extension of the solvency of both Medicare and Social Security. Although a few of the details of this plan are tenuous, his well-chosen priorities and acknowledgement of the Republican Congress’ concerns are commendable.
Clinton’s proposal follows revised estimates of the projected federal budget surplus, which increases the amount to $2.93 trillion over the next 10 years, an increase of $500 billion from the previous estimate made five months ago. Over 15 years, the previous budget surplus estimate will have increased by $1 trillion.
The federal debt, which includes the total amount of money the federal government owes to the public, but not the amount it owes to itself, is currently $3.6 trillion. Although this amount has already begun to diminish, the problems associated with it have not. Because of the debt, interest rates have remained high, and tax revenue has been used to pay interest payments. By decreasing the debt, tax revenue can be used for more government spending or tax reductions.
Another problem the budget addresses is the diminishing funds for Medicare. As the baby boom generation begins to retire, the number of participants increases while the number of workers supporting the program decreases. Although the president will introduce a more detailed plan to restructure the program this week, it is clearly a priority in this budget. The budget allocates $800 billion from the projected surpluses over the next 15 years to ensure tenability through 2025.
Clinton’s plan for Social Security makes important allowances to congressional Republicans. The president conceded the Republicans that Social Security taxes not be used for increased government spending, instead proposing the $3 trillion in revenue be used for debt reduction over the next 15 years. He also abandoned the goal of 75 years of guaranteed solvency, mollifying Republicans who seek tax cuts and Democrats who seek increased spending initiatives.
While Clinton’s proposal is a result of deft politicking and prudent decisions, some flaws do exist. His budget estimates, though less than the likely estimate from the Congressional Budget Office, are contingent upon an economy with continuously prosperous expansion rates. Although the United States is experiencing the longest peacetime expansion of its economy, it is unlikely that its integrity will remain for the next 15 years. Congress would be wise to consider the optimism of these figures when debating the budget. Also, the decision to invest Social Security funds in the stock market is considered dangerous because it also relies on continued economic growth. In addition, corporate investment by the federal government will create a conflict of interest.
Clinton’s legacy has been created with consideration and acuity. The economic success that occurred during his tenure created the projected surplus that he is wisely using to ensure financial success for the nation’s future.