Recalling the lost paradise of budget surpluses

Hard to believe, but once upon a time, economists worried that the U.S. government would pay off all its debt. Also hard to believe, once upon a time was only 11 years ago.

President Clinton had bequeathed his successor budget surpluses “as far as the eye could see.” He wanted some of them used to speed up repayment of the remaining $3.6 trillion still owed the public in Treasury bonds. He said it could all be paid off by 2013.

No magic there. A modest tax increase, controlled spending and a strong economy made more confident by disciplined budgeting had ended a scary era of deficit spending.

Can you imagine this causing concern? If the federal government didn’t need to borrow and paid off outstanding debt, it was said, U.S. Treasury bonds would disappear. Where would investors find a safe haven for their money? And suppose the U.S. government needed to borrow again in the future. How easily could it re-establish a market for Treasuries?

Wall Street analysts scoffed at the idea of a debt-free U.S. government. They figured that politicians would dip into the surpluses for tax cuts or more spending. An economic downturn could change the picture. But this is what you call a high-class problem. The surplus offered the opportunity of a generation to invest in America and its people’s well-being.

But the analysts probably never dreamed that the next president, George W. Bush, and his Republican Congress would slash taxes, run two wars and create a $1 trillion Medicare drug benefit without a thought of paying for it. Meanwhile, financial deregulation accelerated, taking the cops off a Wall Street already made drunk by low interest rates and the attendant housing bubble. The inevitable financial crash followed, kicking off the deepest downturn since the Great Depression. Before you knew it, Republicans had turned a $155 billion surplus into a $1.5 trillion deficit.

The point of all this is not to repeat a story sure to become more familiar as the presidential nominees fight over who killed America’s golden goose. The point is to note that what happened to us did not drop from the mesosphere. It was manufactured by a political process running on myths, lies and the purchase of political influence by moneyed interests.

“Republicans controlled Washington from 2001 to 2006,” GOP House Majority Leader Eric Cantor wrote last year in the book “Young Guns: A New Generation of Conservative Leaders.” “They did some good things, but they also did a lot to give conservatism a bad name.”

The good news, the Virginia rep went on, is that Republican “young guns” like himself and Wisconsin Rep. Paul Ryan would set the country aright.

First off, a few brave “old” Republicans did vote against the reckless Bush tax cuts and the unfunded Medicare drug benefit. But not Cantor. Not Ryan. They voted for the tax cuts, the new entitlement and both wars.

So boy, what an exhausting round of plastic surgery had to be done on their records to turn these guys into the fresh face of fiscal rectitude. Given Ryan’s history, his post-surgical plan to fix the deficits by radically ending the government guarantees in Medicare seems less impressive.

The baby boom generation did not suddenly appear with the election of President Obama. It was no secret that the aging boomers would make future heavy demands on Medicare. Actually, saving for that day was one of the suggested uses for the surpluses that Republicans quickly blew through.

Yes, there was a once-in-a-life opportunity to preserve the good life in America and not run up ruinous deficits. But that was once upon a time.

Froma Harrop is a Providence Journal columnist. Her email address is

Talk to us

More in Opinion

Editorial cartoons for Thursday, June 30

A sketchy look at the news of the day.… Continue reading

Joe Kennedy, a former assistant football coach at Bremerton High School in Bremerton, Wash., poses for a photo March 9, 2022, at the school's football field. After losing his coaching job for refusing to stop kneeling in prayer with players and spectators on the field immediately after football games, Kennedy will take his arguments before the U.S. Supreme Court on Monday, April 25, 2022, saying the Bremerton School District violated his First Amendment rights by refusing to let him continue praying at midfield after games. (AP Photo/Ted S. Warren)
Editorial: Court majority weakens church, state separation

The Supreme Court’s 6-3 decision does more to hurt religious liberty than protect a coach’s prayer.

Supreme Court weakens wall between church, state

The Supreme Court definitely got it wrong with regards to the Bremerton… Continue reading

Snohomish tax break for developers shifts burden

City of Snohomish Planning Director Glen Pickus in his Oct. 2, 2018… Continue reading

Comment: Patriot Front arrests in Idaho a reminder of threat

The West has past experience with right-wing extremists. A van full of white men looking to riot should surprise no one.

Comment: The weight of Jan. 6 chairman’s optimistic melancholy

Rep. Bernie Thompson’s measured demeanor set a factual tone for Tuesday’s unsettling testimony.

A pregnant protester is pictured with a message on her shirt in support of abortion rights during a march, Friday, June 24, 2022, in Seattle. The U.S. Supreme Court's decision to end constitutional protections for abortion has cleared the way for states to impose bans and restrictions on abortion — and will set off a series of legal battles. (AP Photo/Stephen Brashear)
Editorial: Court’s decision a subtraction from our rights

Using a cherry-picked history, it limits the rights of women and will extend the reach of poverty.

A Capitol Police Officer rests his hand near his gun as he works by the anti-scaling fencing outside the Supreme Court, Thursday, June 23, 2022, in Washington. (AP Photo/Jacquelyn Martin)
Editorial: Tough path for gun legislation becomes less clear

U.S. Supreme Court decision on gun laws clouds hopes for reasonable and effective safety measures.

FILES - Cars line up at a Shell gas station June 17, 2022, in Miami. President Joe Biden on June 22 will call on Congress to suspend the federal gasoline and diesel taxes for three months. It's a move meant to ease financial pressures at the pump that also reveals the political toxicity of high gas prices in an election year. (AP Photo/Marta Lavandier, File)
Editorial: Gas tax holiday could end up costing us even more

President Biden’s request to suspend gas taxes offers little benefit and considerable risk.

Most Read