Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, March 6, 1990 TAG: 9003061983
SECTION: NATIONAL/INTERNATIONAL PAGE: A2 EDITION: METRO
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
But the non-partisan CBO said that, in the long run, the president's plan would significantly reduce the budget gap and lead to the budget being nearly in balance by fiscal 1995.
The new CBO report predicts the deficit next year will be about $131 billion under the president's plan, nearly $70 billion more than the White House predicts.
The administration budget is too optimistic in its forecast of economic conditions and interest rates, according to the CBO, and it fails to include additional short-term costs now expected for the clean-up of the savings and loan industry.
As a result, the CBO now estimates that the federal deficit would be $161 billion in fiscal 1991 if no deficit-cutting action were taken. That's up from $138 billion it estimated in January.
The White House said its budget program would reduce the deficit to about $61 billion, based on a starting point of about $100 billion based on its economic assumptions.
The administration in its budget submitted in January did not include additional costs for the thrift buyouts.
Office of Management and Budget spokeswoman Barbara Clay said that the need for additional savings and loan buyout money would be included in the administration's mid-year revisions in July, but that OMB might not agree with the $26 billion additional cost estimate of the CBO.
The CBO estimates that the deficit-reduction proposals contained in the president's budget would trim red ink by about $31 billion, compared to $37.5 billion estimated by the White House. One big difference is over what the president's tax increase proposals are worth - $9.4 billionaccording to CBO compared to $15.7 billion in the administration estimate.
But CBO director Robert Reischauer said $31 billion in deficit reduction is not insignificant.
"By historical standards, that is a great deal more than we have achieved in recent years," he said.
The CBO projects the budget will be nearly in balance by fiscal 1995, two years later than the administration's forecast, if Bush's program is adopted.
Senate Budget Committee Chairman Jim Sasser, D-Tenn., said the CBO report is evidence that "the Bush administration is perpetuating the fiscal chicanery of the 1980s . . . slip-sliding away from fiscal responsibility."
Under the Gramm-Rudman law, Congress and the administration are required to reduce the deficit in fiscal 1991, which begins Oct. 1, to $64 billion or less.
The administration produces the estimates that determine whether that target is met. The CBO estimates are advisory.
by CNB