If I had told you that by the end of the 1990s we would have replaced the sluggish productivity growth of the 1970s and 1980s with the impressive growth rates last seen in the 1950s and 1960s, you would have been surprised at my audacity. And if I had told you that by the turn of the century, the combined total of unemployment and inflation rates in America would be close to seven, you would have questioned my sanity. This is the reality of the American economy in 2000. But if I had to single out one factor of particular importance, it would be the dramatic shift from the era of rising budget deficits to one of rising budget surpluses. There are many virtues to balancing the books.
Budget surpluses act as an effective tax cut for individuals by lowering long-term interest rates.
Balancing the books also re-loads the fiscal cannon so that it can be better prepared to meet unforeseen events, such as economic shocks. One particularly important benefit of budget surpluses is that they increase the level of national savings. That is why the hard choices we made in 1993 and 1997 were so important. The growth of budget surpluses has created more resources that the Administration proposes to transfer to the Social Security Trust Funds to extend their solvency for the benefit of future generations. And surpluses have enabled this Administration to pay off Federal debt that reduces long-term interest rates and raises the level of private sector investment.