Tuesday, January 25, 2011

"Balanced budgets as far as the eye can see"

Ezra Klein points out that most State of the Union speeches mostly do not produce a noticeable bump in a president's Gallup Poll numbers, with a few exceptions, most notably Bill Clinton's 1998 address, which generated a ten point increase in his approval rating.

So what made this one so exceptional? It was the first time most of us had ever heard a president announce that the federal government had balanced its budget:
Tonight, I come before you to announce that the Federal deficit, once so incomprehensibly large that it had 11 zeros, will be simply zero.
I will submit to Congress for 1999 the first balanced budget in 30 years. And if we hold fast to fiscal discipline, we may balance the budget this year, 4 years ahead of schedule. You can all be proud of that because turning a sea of red ink into black is no miracle. It is the product of hard work by the American people and of two visionary actions in Congress: the courageous vote in 1993 that led to a cut in the deficit of 90 percent and the truly historic bipartisan balanced budget agreement passed by this Congress.
Here is the really good news. If we maintain our resolve, we will produce balanced budgets as far as the eye can see.
The last Republican president to manage this feat was Dwight Eisenhower. Budget deficits under Reagan ranged from 2.78 percent to 5.88 percent of GDP.

Clinton went on to set one top priority for using the budget surplus:
Now, if we balance the budget for next year, it is projected that we will then have a sizable surplus in the years that immediately follow. What should we do with this projected surplus? I have a simple, four-word answer: save Social Security first.
The singular achievement was matched by a singular focus from a president who had been known for weighing down his speeches with endless litanies of policy proposal.

The speech came just a few days after the Lewinsky scandal had broken. Clinton was forced to deny the allegations the day before his address to Congress. The juxtaposition of the tawdry scandal with the achievement of a balanced budget may have contributed to the bump in the polls.

Congress of course never took up Clinton's challenge to strengthen Social Security, instead impeaching him in December of 1988. We know the rest of the story. The scandal probably dragged down Al Gore in the 2000 election. George W. Bush used the surplus for tax cuts, which lurched the federal government back into deficit spending and produced zero net jobs for the decade. Happily, Bush's proposal to privatize Social Security went nowhere. The Bush budgets left the U.S. with a dangerous budget deficit when the need for fiscal stimulus was most urgent.


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