The U.S. federal budget deficit can be eliminated. Data from the Treasury Department shows that the federal government achieved surpluses for four consecutive years from fiscal year 1998 to 2001, with the last surplus occurring in 2001.

In fiscal year 1998, the U.S. federal budget shifted from a deficit to a surplus of approximately $69 billion, ending nearly 30 years of annual deficits since 1969; the surplus expanded to about $236 billion in fiscal year 2000, accounting for approximately 2.3% of GDP.

During Clinton's presidency, the federal fiscal situation improved from a deficit of about $290 billion in 1992 to a surplus of about $127 billion in 2001; during the same period, non-farm employment increased by about 22.5 million to 22.7 million, and the unemployment rate fell from about 7.5% at the beginning of his term to about 4.0% at the end.

The economic expansion of the late 1990s is often referred to as one of the longest periods of sustained growth in post-war America, but the term "longest peacetime economic growth" is not an accurate fiscal term. The U.S. economic expansion typically lasted from March 1991 to March 2001, approximately 120 months, and was later surpassed by the 128-month expansion cycle from 2009 to 2020.

Budget balance is not solely the result of White House policies. The 1993 tax increase and spending controls, the 1997 Balanced Budget Act, the decline in defense spending after the Cold War, the surge in capital gains tax revenue from the tech and stock market boom, and lower welfare spending due to low unemployment all contributed to fiscal improvement. Research shows that the fiscal balance relative to GDP improved by 6.8 percentage points from 1992 to 2000, much of which came from the end of the Cold War and temporary bubbles in the stock market and tax revenue.

In market terms, a fiscal surplus means that government revenue exceeds expenditures for the year, allowing the federal government to reduce new borrowing and repay some public debt. The buyers are private capital markets receiving more available savings and lower supply of government bonds, while the sellers are the U.S. Treasury reducing the scale of bond issuance; a contraction in net bond supply can lower financing rates and support private investment. However, if the surplus mainly comes from asset price bubbles and cyclical tax revenues, an economic downturn will quickly reverse the balance as capital gains tax, corporate tax, and employment tax revenues decline. The surpluses from 1998 to 2001 did not form a permanent structure, as the recession in 2001, tax cuts, rising military spending, and demographic changes subsequently restarted long-term deficits.

Source: Public Information