Big budget deficits haven’t always been with us.
From the end of the Eisenhower years through the Carter presidency, the deficit averaged a modest 1.4% of the nation’s economic output. The budget was nearly balanced in seven of the 20 years from 1960 to 1979. And, as Bill Clinton reminds at every opportunity, the U.S. government was in surplus for four years at the end of his presidency.
In January 2001, the Congressional Budget Office projected annual surpluses totaling $5.6 trillion over the following 10 years. Alan Greenspan, the Federal Reserve chairman at the time, worried out loud about the consequences of paying off the federal debt, such as the possibility that the government might invest its surpluses in corporate stock and meddle in management.