The Deficit Disappeared, but That Was Then: "In the last couple of years, the 10-year deficit predicted by the Congressional Budget Office has swung from a cumulative surplus of $5.6 trillion to a total deficit of at least $2.3 trillion — the result of a sour economy, President Bush's tax cuts and unanticipated spending for war and domestic security.
The last time there was a spike in the federal deficit, it grew out of Ronald Reagan's tax cuts in 1981 and the deep recession in the early 1980's. Over the rest of that decade, politicians in Washington tried various gimmicks to deal with the situation, none of which worked.
Then, in 1990, after a year of wrenching negotiations, President George H. W. Bush and the Democratic Congress struck a deal in which income taxes were increased and rigid rules were imposed that limited spending.
... Without a single Republican vote, Mr. Clinton won approval of legislation in 1993 that raised income taxes, mostly on the wealthy, and kept the spending discipline rules that had been enacted in 1990.
... Then, unexpectedly, the economy began to soar. Tax revenue surged. Government spending leveled off."
- posted by geoff @ #