*EPF101 02/07/00
The Clinton Fiscal Year 2001 Budget in Perspective
(Fact sheet on fiscal 2001 budget proposals) (910)

Washington -- President Clinton's budget for fiscal year 2001, beginning October 1, 2000, envisages record surpluses that would be used to bolster the nation's government-sponsored retirement and health insurance programs for the elderly, pay down the national debt and enhance the nation's educational infrastructure.

It does not include an across-the-board tax cut as urged by some Republicans, though it does call for targeted cuts to help those who want to go to college, save for retirement, and care for sick relatives. Clinton's budget also proposes additional taxes on cigarettes and eliminates certain tax benefits to corporations.

The $278,584 million proposed for the Department of Defense -- just $380 million over the previous year -- would go to help modernize weapons and provide better pay for the armed forces.

Clinton's 2001 budget projects $2,019 million in revenues, up 3.2 percent from the current year's estimate of $1,956, and $1,835 million in spending, up 2.5 percent. The Clinton budget promises to eliminate the national debt by 2013.

Following are additional highlights from the fiscal 2001 budget proposals

BUDGET TOTALS

Revenues: $2,019,031 million
Outlays: $1,835,033 million
--------------------
Budget surplus: $183,998 million

DEFICIT REDUCTION

The U.S. budget deficit reached its peak in 1992, eventually moving into surplus in 1998. Prior to 1998, the nation had 28 years of consecutive deficits. Recent, estimated or proposed deficit and surplus figures, in millions of dollars:

1992 -290,404
1993 -255,110
1994 -203,275
1995 -164,007
1996 -107,510
1997 -21,990
1998 69,187
1999 124,414
2000 (estimate) 166,690
2001 (proposed) 183,998

FEDERAL SPENDING

Up $45,471 million, or 2.5 percent, from 2000.

REVENUES

Up $62,779 million, or 3.2 percent, from 2000.

DISTRIBUTION OF PROPOSED SPENDING, FY2001 (percent)

Social Security 23
Non-defense discretionary 19
Medicaid and Medicare 19
National defense 16
Means-tested entitlements and
other mandatory spending 12
Net interest on national debt 11

SOURCES OF REVENUE (percent)

Individual Income Taxes 48
Social insurance taxes 34
Corporate Income Taxes 10
Excise Taxes and Customs Duties 4
Other 4

DEFENSE SPENDING

The United States is the sole remaining superpower in the world, with military capabilities unsurpassed by any nation. However, regional conflicts abound and military spending will attempt to support a strategy that: sustains U.S. defense forces at levels sufficient to undertake a strategy of engagement; maintains capabilities to mobilize and rapidly deploy forces; gives U.S. forces the military hardware that employees the best available technologies; and conducts programs to reduce weapons of mass destruction, prevent their proliferation, and combat terrorism. The president requests $292,169 million in budget authority for the Department of Defense for 2001, up from an estimated $280,900 million in 2000, and $278,584 million in outlays. The budget stresses several areas: recruiting and retention of personnel through a military pay raise, funding for three new aircraft programs, and $543 million ($4,300 million over the 2001-2005 period) for transforming of heavier ground vehicles into more easily deployable "Medium Armored Vehicles."

NEW NON-DEFENSE PROPOSALS

-- Tax relief: Clinton's proposed a 10-year, $351,000 million tax cut package will face an uphill battle against a Republican-controlled Congress that seeks broad-based tax relief. Some of the proposals include: $54,000 million to encourage people to save more through individual retirement accounts; $30,000 million in educational benefits; $23,000 million in tax relief for poorer working Americans; $27,000 million in benefits for those caring for sick relatives; and $30 million in additional tax deductions for child care.

-- Tax increases: Clinton proposes tax increases over 10 years of about $180,000 million, including a 25-cent-a-pack increase in cigarette taxes and the closing of numerous corporate tax shelters.

-- U.S. leadership in the world: Clinton proposes $175 million to bolster democracy in Kosovo; $428 million to promote political and economic integration of the Balkans into Europe; $5,200 million to support the next phase of negotiations between Israel and its neighbors; $974 million to contain the spread of weapons of mass destruction; $1,272 million for drug interdiction in Colombia; and $600 million in debt relief for the poorest heavily indebted countries.

-- Health: The budget proposes a 10-year, $160,000 million prescription drug benefit for Medicare, the health insurance program for the elderly and disabled.

-- Environment: The budget calls for a record $42,500 million to protect natural resources, communities and families. It includes a 42-percent increase in funding to combat global climate change, and resources for a new program to stem the loss of forests worldwide.

DEFICITS AND SURPLUSES AS A PERCENTGE OF GDP

During World War Two, the U.S. budget deficit as a percentage of gross domestic product (GDP) reached as high as 30.3 percent. The post-1946 record high of 6.0 percent was reach in 1983. The largest surplus in the post-war period was 4.6 percent in 1948. From 1991 to the 2001 proposals, the path is:

Deficit/Surplus
Fiscal year as percent of GDP

1991 -4.5
1992 -4.7
1993 -3.9
1994 -2.9
1995 -2.2
1996 -1.4
1997 -0.3
1998 0.8
1999 1.4
2000 (estimate) 1.7
2001 (estimate) 1.8

U.S. GOVERNMENT SPENDING AND REVENUES AS PERCENT OF GDP

Spending Revenues
as percent as percent
Fiscal year of GDP of GDP

1991 22.3 17.8
1992 22.2 17.5
1993 21.5 17.6
1994 21.0 18.1
1995 20.7 18.5
1996 20.3 18.9
1997 19.6 19.3
1998 19.1 19.9
1999 18.7 20.0
2000 (estimate) 18.7 20.4
2001 (estimate) 18.3 20.1

(Distributed by the Office of International Information Programs, U.S. Department of State.)

NNNN


Return to Washington File Main Page
Return to the Washington File Log