Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Clinton Budget to Erase Debt

WASHINGTON -- President Bill Clinton said Tuesday that the budget he will send the U.S. Congress on Feb. 7 will propose paying off the entire $3.6 trillion national debt by 2013 - two years earlier than had been expected even a few months ago.

At a news conference, the president attributed the opportunity for a speedup to an economy that is even stronger than had been forecast, resulting in higher tax revenues and lower expenses, and to his own austere budget policies.

At the same time, the nonpartisan Congressional Budget Office issued revised estimates projecting that the federal budget surplus over the next 10 years is likely to top $1.9 trillion - substantially larger than it had predicted as late as last December.

The CBO also acknowledged that, contrary to previous estimates, congressional Republicans managed to keep from draining any of the surplus in the Social Security trust fund in fiscal 2000, even though they breached the overall budgetary spending caps that Congress set in 1997.

The agency's estimates showed that, instead of dipping into the Social Security fund by $17 billion, as it had projected in December, the lawmakers actually would end up with the trust fund intact and a $23 billion surplus in the government's operating budget.

Republicans quickly called a news conference to proclaim victory in their battle to prevent any further drain on the Social Security trust fund. "It turns out that we are right [and] the other side was wrong," Senate Budget Committee chairman Pete Domenici said.

Tuesday's developments set the stage for another yearlong skirmish in the battle over what to do with the burgeoning federal budget surpluses that the government is now projecting for the next decade.

The latest projections are also expected to be converted into cannon fodder in this year's presidential and congressional election campaigns.

"Now is not the time to let up on a strategy that is plainly working," the president said at a news conference intended to highlight the improved prospects for debt reduction. He asked Congress' Republican majority "to put politics aside and join me."

Clinton also used the impromptu news conference to claim credit for the improved budget picture and to divert attention from the new CBO estimates, which support Republicans' assertions that they succeeded in "protecting" the Social Security surplus. Republicans made what they called "saving" Social Security a political theme last year. For most of the last 40 years, the government has been borrowing from the Social Security trust fund to finance some of the deficit in its day-to-day operating budget.

The Republicans also took credit for the continuing improvement in the budget picture and for the progress that the government has been making in using part of the surplus to pay off the national debt.

The White House said Tuesday that the Treasury had paid off $140 billion of the national debt over the last two years and the CBO estimated that the government ran an overall surplus of $176 billion in fiscal 2000, all of which will go to pay down the debt.

Indeed, the $1.9 trillion cumulative overall surplus that CBO projected for the next decade is based on the assumption that Congress will observe the spending caps established in 1997.