Washington has been in a fight overall reducing the deficit, and there has been consternation on how to do it. Republicans in particular seem to have forgotten that we balanced the budget not too long ago. During the Clinton Administration the deficit was reduced from 4.7% of GDP to a surplus of 2.4% of GDP between 1992 and 2000. This was done by doing mainly two things; raising taxes and cutting defense spending.
In 1992 when Bill Clinton was elected President Federal Revenues were 17.5% of GDP. In 1993 Bill Clinton signed a budget that increase taxes on the top earners, raised corporate taxes, eliminated the cap on Medicare taxes, and limited deductions for high income taxpayers. In the last year of the Clinton Presidency Federal revenues were 20.6% of GDP. This means of a 4.7% of GDP of debt was reduced to 1.6% by revenues alone. These tax hikes were of course followed by the longest period of peacetime economic growth in U.S. history.
The next thing the Clinton administration did was cut defense spending. In 1992 defense spending was $295 billion, and it was $278 billion in 2000. This means that over the course of the Clinton year’s defense spending was cut 6%. According to the Council on Foreign Relations when you take inflation into account defense spending dropped 25% in the 1990’s overall. To put this in perspective overall spending from 1992-2000 increased 30%. From 2000-2009 defense spending increased more than 230%. In the same time period revenues dropped to 15.1% of GDP.
Any questions as to why are debt has skyrocket since 2001?