NEW YORK (CNNfn) - President Clinton on Monday proposed paying off the national debt by 2015 after issuing a new budget outlook that adds $1 trillion more to the overall budget surplus over the next 15 years.
The president, who plans to unveil a major Medicare reform initiative on Tuesday, said he wants to use the surplus to add decades of solvency to the Social Security and Medicare systems, which are otherwise expected to go broke as the "Baby Boom" generation retires.
President Clinton speaking to reporters
at the White House
"If we maintain our fiscal discipline, using the surplus to pay down the debt and using the savings to strengthen Social Security, America will entirely pay off the national debt by 2015," Clinton told reporters on the White House lawn.
Clinton said the budget surplus for fiscal year 1999 would be a higher-than-expected $99 billion, compared to an earlier projection of $79 billion. For fiscal 2000, which begins Oct. 1, Clinton sees the budget surplus rising to $142.5 billion from an earlier projection of $117.3 billion.
"Improvements in the outlook since February have added $179 billion to the projected budget surplus over five years, half a trillion over 10 years, and a trillion over 15 years," Clinton said.
In February, the White House forecast a five-year surplus of about $700 million, a 10-year surplus of about $2.41 trillion and a 15-year surplus of about $4.47 trillion.
Surpluses exceeding expectations
Budget surpluses have surpassed most projections recently as the booming U.S. economy, now in its ninth year of expansion, and big stock market gains have filled government coffers with soaring revenues.
Clinton said the White House now expects the government to run a $5 billion surplus in fiscal 2000 excluding money from the Social Security surpluses, the first such surplus in four decades.
"I am pleased that Republicans and Democrats in Congress have agreed to use the Social Security surpluses to reduce the national debt, but we must go forward and achieve an even stronger lockbox than (the) one proposed by Congress," Clinton said. "Social Security taxes should be saved for Social Security, period."
If lawmakers heed the president's call for all Social Security payroll tax revenues to be used to shore up that program, U.S. officials said this would extend Social Security's solvency by about 20 years to 2053. They said proposals Clinton will unveil on Tuesday would extend Medicare's solvency to at least 2025.
Stocks and bonds rallied after Clinton's address, and managed to keep many of their gains. The Dow Jones industrial average rose 103.85 points, or nearly 1 percent, to end the session at 10,656.41. And in the Treasury market, the benchmark 30-year bond jumped 20/32 of a point in price, pushing the yield down to 6.09 percent.
Some flexibility on tax cuts?
Clinton's plan did not include any major increases in the targeted tax cuts that he proposed earlier this year in areas such as child care and long-term care. Congressional Republicans want to use surpluses for far bigger tax cuts than Clinton has offered.
The president, however, hinted there might be some flexibility. Asked if he would consider tax cuts beyond the targeted measures he has championed, Clinton replied: "I think we should achieve these objectives. Within the framework of achieving these objectives, obviously I'll be working with the Congress."
Clinton also Monday proposed the establishment of a $156 billion children's and education trust fund that "could enable us to offer Head School preschool to a million children, to hire those hundred thousand teachers, to provide extra help for a million children in our poorest communities, to pay for dramatic improvements in children's health."
The centerpiece of Clinton's Medicare reform plan, which will be unveiled Tuesday, is a proposal to offer prescription drug coverage to all 39 million Medicare recipients. Many Medicare recipients buy private insurance to cover drug costs, but the Clinton administration says about 15 million have no such coverage.
-- from staff and wire reports