by Mitch Kokai
Senior Political Analyst, John Locke Foundation
Veronique de Rugy writes in the Washington Examiner that politicians interested in the tax rates last seen during President Bill Clinton’s administration ought to consider Clinton-era spending levels as well.
[I]t is true that the Clinton years saw economic growth, increasing median income, vanishing deficits and relative peace. Why doesn’t the president try to copy all Clinton-era policies? Because that would mean seriously cutting spending.
On Jan. 27, 1996, President Clinton proclaimed that “the era of big government is over, but we can’t go back to a time when our citizens were just left to fend for themselves.” He added, “So, again, last Tuesday, I asked Congress to join with me to make the cuts we agree on. Let’s give the American people the balanced budget they deserve with a modest tax cut and the lower interest rates and brighter hope for the future it will bring.” And they came through on that promise.
During his two terms in office, Clinton reduced spending as a share of gross domestic product from 21 percent in fiscal year 1994 to 18.2 percent of GDP in fiscal year 2001. Today, spending stands at 24.3 of GDP. According to the Office of Management and Budget, Obama’s two-term average spending level is projected at 23.4 percent of GDP as opposed to 19.9 percent for Clinton. During his two terms, Clinton grew spending by 12.3 percent in real terms — a sharp contrast with the Reagan years and the Bush years. When he left office, total spending was close to $2 trillion, and the federal government registered a surplus of $142 billion (all numbers are adjusted for inflation). In fiscal 2012, federal spending was $3.2 trillion, and our deficit was $1.1 trillion.
For all the talk about returning to Clinton-era policies, the president is sadly silent about his predecessor’s spending levels. To be fair, the only way that we could go back to these spending levels is if Congress finally reforms Social Security, Medicare and Medicaid. And reforming those programs is also the only way to put this country back on a sustainable financial path. So what are we waiting for?