That was not the only year for which budget experts were wide of the mark. In both their five-year projections and their annual budget estimates, OMB and CBO persistently overestimated the deficit. Actual deficits totaled less than a third that. An analysis of economic performance, spending policies, and revenue trends during the 1980s and 1990s makes clear how the federal budget was balanced. Whether it will still be balanced a decade from now when the first wave of baby boomers reaches retirement is much less certain.
Every budget is hostage to the economy.
Congress and the president cannot balance the budget when national output is declining and unemployment is soaring. Budget receipts are highly sensitive to changes in economic conditions, spending less so, but even a small shortfall in economic performance can affect the budget in a big way. When the deficit peaked in 1992, the United States was emerging from a brief recession. When the budget was balanced in 1998, the economy was completing the seventh consecutive year of growth, during which 13 million jobs were added and inflation averaged less than 3 percent. The budget was the beneficiary of economic success.