
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: MONDAY, February 4, 1991                   TAG: 9102040030
SECTION: NATIONAL/INTERNATIONAL                    PAGE: B-5   EDITION: METRO 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium

BUDGET PROJECTS LARGEST U.S. DEFICIT

President Bush today will send to Congress a $1.4 trillion spending blueprint for 1992 that will project the largest budget deficit in the nation's history while counting on America's allies to keep the Persian Gulf war from making that deficit even worse.

The administration also will propose sharp cutbacks in Medicare, including restraints on benefits received by more well-to-do recipients, to keep the government's tide of red ink from rising even higher.

White House Budget Director Richard Darman said Sunday the administration is forecasting that the Persian Gulf war will cost the United States $15 billion, with another $51 billion of the tab picked up by its allies.

Darman didn't provide any details on where the foreign money would come from. But Treasury Secretary Nicholas Brady, who has been heavily involved in the fund-raising effort, said the administration expected to receive $41.5 billion from the allies to defray the costs of the fighting in the first three months of this year.

Brady listed those contributions as $13.5 billion from Saudi Arabia, $13.5 billion from the exiled government of Kuwait, $9 billion from Japan and $5.5 billion from Germany.

Both Darman, who appeared on NBC's "Meet the Press," and Brady, interviewed on ABC's "Business World," insisted the administration had no plans for raising taxes to pay for the war.

The $15 billion in extra costs projected for this year will be financed through additional borrowing, Darman said. That will increase the size of the budget deficit - the difference between what the government spends and what it receives in tax revenues.

Bush's new budget, which includes deficit predictions for both fiscal 1991 and '92, forecasts the deficit for the current year will hit a record $318 billion. That surpasses the old mark of $221.6 billion set in 1986.

by CNB