Clinton Sees $1.9 Trillion Surplus

Thursday, December 28th 2000, 12:00 am

By: News On 6

WASHINGTON (AP) â€” President Clinton on Thursday projected that the country will enjoy a $1.9 trillion budget surplus over the next decade. He said the $300 billion increase over the last estimate last summer means the U.S. government could be free of publicly held debt in less than a decade.

``If we took that budget and committed the entire surplus to reducing the debt, we can make America debt-free by 2009,'' Clinton said.

The government debt is $5.6 trillion, including $3.6 trillion held by the public.

In recent years, Clinton has proposed setting aside on part of the annual surpluses for debt reduction, devoting the remainder to a combination of tax cuts and spending increases.

President-elect Bush has proposed devoting $1.3 trillion of the projected surpluses to across-the-board tax cuts.

Clinton declined to pass judgment on Bush's proposals, but said there are ``huge economic benefits'' of following ``a long-term responsible budget policy.''

White House officials said the projected surpluses are based on the assumption there will be no tax cuts. That seems unlikely with Bush's victory and support for several tax cuts last year among Democrats in Congress even though Clinton vetoed them.

The projected $1.9 trillion surplus excludes projected surpluses in Social Security and Medicare funds, which Bush has agreed will be needed later to deal with aging baby boomers and should not be tapped to cut taxes.

The fiscal 2001 budget surplus was projected at $256 billion, White House officials said. The fiscal 2000 surplus was a record $237 billion, officials said, which capped three straight years of budget surpluses.

This would be the first time the country has had four straight budget surpluses since 1930, officials said.

Clinton contrasted the federal government's budget situation to when he came in office and there was a $290 billion deficit. ``Interest rates were high, growth was low and the confidence of the American people was shaken,'' he said.

The increase in the surplus, which does not include the Social Security or the Medicare surplus, would mark the ninth consecutive year in which the government's bottom line has improved, a first.

In June, Clinton projected a 10-year surplus of $1.87 trillion. The new figure was $300 billion higher.

``These are conservative numbers,'' Clinton said at a White House news conference.

Over that same 10-year period, the surplus for Social Security is expected to grow to $2.5 trillion while the Medicare surplus is expected to grow to $532 billion, said Jack Lew, the White House budget director.

Bush has cautioned about a potential downturn in the economy, even though most private economists expected it to continuing growing, but at a much slower rate than the 4.2 percent to 4.4 percent of the past three years.

Earlier this month, the government reported that economic growth had slowed to 2.2 percent in the third quarter, the slowest rate since 1996.