Deficit reduction moved to the top of America's public agenda in February 1993 when President Clinton laid out his economic plan. In a major speech to Congress that took the problem of the national debt seriously, President Clinton underscored his intention to encourage the nation to think long term. He described the kinds of sacrifices that will be necessary to reduce the deficit over the next five years, proposing a series of spending cuts and tax increases.
The purpose of this research is to examine the programs necessary to reduce the federal deficit and move towards a balanced budget. Emphasis will be given to examining the types of spending cuts available to the federal government for reducing the deficit. The relative contribution of these spending cuts toward balancing the federal budget will be also be assessed.
The national debt is as old as the nation itself. Alexander Hamilton, the first Treasury Secretary under the George Washington Administration, was the first time the United States government borrowed money to finance government programs and capital construction projects. The nation has been in debt ever since. But the proportions of this national debt have only become staggering since the Reagan Administration of the 1980s.
From 1946 to 1970, the debt grew from $271 billion to $381 billion, a yearly average deficit of less than $5 billion. (The federal deficit is one year's increase in the debt. The federal debt is the sum of all past yearly deficits.) Since 1982, every annual deficit has been above $100 billion and will remain above $200 billion in the 1990s. In fiscal year 1992, the deficit was an all-time high of $290 billion, which actually came as a pleasant surprise, considering that it was originally projected to be as high as $400 billion. Adding all these deficits together through the years creates the total national debt. Through all of American history from the administration of Georg...