In the first presidential debate of 2000, George W. Bush and Al Gore sparred over what to do about the growing federal budget surplus. That’s right, surplus.
For the first time since 1973, the U.S. had balanced its budget and was on track to retire the national debt by 2010.
Instead, U.S. debt today is racing toward the World War II-era record 106% of GDP and splashing red ink as far as the eye can see. What happened?
Simple. Spending rose sharply while tax revenues fell.
During fiscal year 2001, government spending was 18.8% of GDP compared with tax revenues of 20%, yielding the third of four consecutive budget surpluses. At the time, the Congressional Budget Office expected surpluses to increase over the next decade, erasing the national debt.