That, in turn, produces higher revenues and lower federal spending, which together generate larger surpluses. But the changes in the domestic economy have been modest. The biggest new development, the financial crisis in Asia, would, if anything, suggest that the outlook for the American economy, for Wall Street and for federal revenues should be slightly less rosy now than five months ago. Last September, Clinton saw deficits in each of the next three years, with the first surplus in 2002. The federal government has not had a surplus since 1969.
Surpluses burn holes in politicians' pockets.
It will be very hard to preserve these surpluses. The president and Congress agreed last summer on legislation to eliminate the deficit, but they both predicted that the goal would not be achieved until 2002. Economic growth has continued to exceed expectations, and inflation has remained low. Economists, including Alan Greenspan, the chairman of the Federal Reserve, say that the projected surpluses are no reason for complacency. The assets of the Social Security trust fund will grow rapidly in the next decade.