Bill Clinton: “No, the deficit, the annual deficit will go down. But since there will be a deficit, the national debt will go up but at…”

“No, the deficit, the annual deficit will go down. But since there will be a deficit, the national debt will go up but at a much lower rate. What we need to do is to work toward bringing the deficit down to zero. If you look at my little chart that I was showing last night, what it shows--and by the way, all charts show this. Anybody else's chart would show the same thing, the other plans would show the same thing. You can bring this deficit down substantially in 5 years, but because of the exploding cost of Medicare and Medicaid and because health care spending is going up at twice the rate of inflation or more, after 5 years that becomes such a big percentage of the budget, unless you control that, the deficit starts to go up again. If you want to bring it down to zero, what we have to do is to make sure we reform the health care system and do it in a way that by the time this budget ends it cycle in the 5th year, you start having health care costs go down. And believe me, health care costs--in this budget, what that means is health care would go up at the inflation rate plus population. Or in other words, if we could take it up to 6 percent a year instead of 9 percent a year, we could bring the deficit down to zero in about 9 years. And let me say, that would be a very good thing. You can contract the economy too much. Let me just say there are a lot of economists who say, not conservative economists but traditional progressive economists, who say in all periods of slow growth you should cut taxes and increase spending. The problem is our debt is so big we can't do that, that's crazy. So how can we reduce the deficit and grow the economy? By keeping the interest rates down and having people refinance. But you can't do it too fast. So if you go back and look, we're about where Japan was in 1975. They were in the same fix we're in now. They had a deficit that was about the same percentage of their income. And they said, ``We're going to bring this thing down to zero. We're going to do it in 10 years.'' And 10 years later they did it. And now they've run a balanced budget or had a small surplus for the last 5 years as a result of that, even though their economy is growing slower than ours. They have more flexibility to deal with their system than we do. So we've got to do this. And I feel very good about it. I think it's going to work. But we've just got to realize we didn't get into this fix overnight; we're not going to get out of it overnight. Let me just close with this. There are two issues here. One is, what's the condition of the economy and what caused it? The second is, what's the proper response from Government? The economic problems we face have been developing over a 20-year period. Average workers' wages in this country peaked in 1973, if you adjust for inflation. Since '73 more than half of the American people have been working harder for the same or lower wages, while they paid more for health care, housing, and education. That's because of all these changes in the global economy. That's run through Republicans and Democrats. That's a fact of this age and time. The Reagan response, which was continued by President Bush, was cut taxes, tilted heavily to the wealthiest Americans on the theory that they would reinvest it, and spend more money on defense because that will balloon the high-tech economy at home. What happened was, when we had to start bringing down defense at the end of the cold war, by that time health care costs were going up faster than defense was going down. We had to keep spending money on the same health care and interest on the debt. And because they were unwilling to cut other spending or to ask the wealthiest Americans who got the big tax cuts in the eighties to just restore some--we don't even restore all of it. Tax rates are still going to be lower than they were in 1980 before this happened. Because we were unwilling to do that, we had this big imbalance. So what I'm trying to do is to say--I'm not blaming anybody for the larger economic things. These are 20 years in the making. We can turn it around, but we have to have a different response. We have to change from trickle-down economics to an invest-and-grow economics. And that means bringing the deficit down and targeting investments for business, because that's what we're trying to do. Public Works Projects”