Clinton celebrates $39bn budget surplus

THE US is to move back into massive budget surplus over the next 10 years, after three decades of equally large deficits.

Forecasts released yesterday by the White House show a $39bn surplus this fiscal year, slightly smaller than previously thought but still the largest surplus as a share of GDP in 40 years.

But after that the surplus will explode, to $54bn in 1999, reaching $342bn in 2008. Rising growth has delivered a benign mixture of higher tax revenues and lower payments for unemployment benefit, and spending has been trimmed in the wake of the Cold War.

A debate is raging in Washington about how, and whether, to spend the money, given the equally large problems in the funding of social security.

"Now it's official ... America has balanced the budget," President Clinton said yesterday. He said a tax cut was one possibility. Presidential elections are to be held in 2000, and some form of tax cut would help the economy to continue on its path of low-inflation growth while boosting the chances of the Democrats.