President Clinton put forward a $1.77 trillion (£1.23 trillion) budget yesterday that raises spending on defence and education, predicts huge surpluses for the future and ignores Republican calls for a broad tax cut.
The budget, which covers the year beginning on October 1st, sets the stage for a battle with the Republicans over what to do with surpluses that are expected to total $117.3 billion in 2000 and a massive $2.41 trillion over the next decade.
The President's spending plan brushes aside Republican calls for an across-the-board tax cut, preferring to offer targeted tax relief to help, among others, people caring for elderly and sick relatives and stay-at-home parents.
In a blend of scandal and substance that has come to seem normal in Washington, Mr Clinton presented the budget at the White House yesterday morning as Ms Monica Lewinsky sat down to give a closed-door deposition to lawyers on both sides of the Senate impeachment trial debating his removal from office.
If the 2000 budget meets its targets, it will be the third year in a row that the government has achieved a surplus after 28 years of deficits. The government returned to the black in 1998 with a surplus of $69.2 billion and expects one of $79.3 billion in 1999, surging to $393.1 billion in 2009.
The long stream of anticipated surpluses is the result of deficit-cutting packages passed in 1990, 1993 and 1997, the robust US economy now enjoying its longest peacetime expansion in history and a surge in tax revenues.
"If we manage the surplus right, we can uphold our responsibility to future generations . . . by dedicating the lion's share of the surplus to saving Social Security and Medicare and paying down the national debt," Mr Clinton said.
"We have a rare opportunity that comes around once in a blue moon," he added, pointing with glee at a chart showing the national debt shrinking to its lowest level as a share of the economy since the first World War if his long-term plan is enacted.
In his State of the Union speech on January 19th, the President laid out a detailed programme on how to use the $4.47 trillion in surpluses the government expects over the next 15 years.
The bulk, 62 per cent, would shore up Social Security, 15 per cent would bolster the Medicare health-care programme, 12 per cent would fund "universal savings accounts" and 11 per cent would fund priorities like education, research and defence.
While the Republicans have embraced the idea of using most of the surpluses for Social Security, they are also arguing for sweeping 10 per cent tax cuts.
"The next great debate will centre on one simple premise: should we give tax relief to working people when we have the largest surplus in American history?" asked the Republican House of Representatives speaker, Mr Dennis Hastert. "The President says no, while we say yes."
The budget also counts on $8 billion from boosting the tax on cigarettes by 55 cents per pack, on accelerating a 15-cent-per-pack rise that was due in 2002, and on obtaining $18.9 billion over the 2001-2004 period from last year's $206 billion settlement between tobacco companies and the states.