Clinton Hails Budget Surplus of $39 Billion

The White House on Tuesday projected a budget surplus of $39 billion this year and as much as $148 billion by 2002, noting that the United States has not had a budget surplus “since Neil Armstrong walked on the moon.”

The projection is the latest in a series that have shattered long-held pessimism that a budget deficit is inevitable.

“America can now turn off the deficit clock and plug in the surplus clock,” President Clinton said at a Rose Garden ceremony. “Given the speed with which our nation has reached this remarkable milestone, it is perhaps all too easy to forget how hard it was and how far we’ve come.”

The projection, contained in a midyear review by the Office of Management and Budget, follows a similar finding from the Congressional Budget Office earlier this month. As recently as February, the White House projected a $10-billion deficit for the current fiscal year. But on Tuesday, administration officials said a surge in revenues, sparked by a booming economy, had transformed the picture.

“It shows up in withholdings, it shows up in estimated tax payments and--as the Treasury Department projects forward--there’s no reason to see that falling off in the next few years,” said Jack Lew, acting director of the OMB.

The numbers have unleashed unfamiliar pressures over what to do with the windfall. Many conservatives have called for tax cuts, whereas many liberals hope to use future surpluses as a source for new spending. Clinton has urged that the money be used to strengthen Social Security for the monumental expenses that will come when the baby boom generation retires in the next century.

“Now that we’re about to have the first surplus since Neil Armstrong walked on the moon, we face a crucial decision,” Clinton said. “We can use these good times to . . . [save] the Social Security System for generations to come. Or we can . . . squander our surpluses the moment they start coming in.”

Administration officials were clearly pleased with the budget news and released the OMB report earlier than usual, although Lew said the release date was prompted by “intense interest” in the data. Officials pointed out that a $39-billion surplus would be the largest, relative to the size of the overall economy, in 40 years. The White House also was quick to point out that the deficit had soared to $290 billion in 1992, the year before Clinton took office. At one point, the red ink was projected to reach $357 billion this year.