Deficit-Reduction Goals Fall in White House Plan

Clinton joins many presidents who underestimated budget growth

By , Staff writer of The Christian Science Monitor

CANDIDATE Clinton did not come eagerly to the deficit issue. He was more interested in creating jobs and shifting the tax burden toward the rich. But Ross Perot changed that.

The federal budget deficit has been an upward-moving target from the time President Clinton promised to cut the deficit in half by the end of his term.

In his budget last week, the deficit target bounced a little higher still - up another $26 billion from when he announced his basic budget strategy less than two months ago.

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The president has not yet figured in the really expensive part of his program. If he proposes a serious step toward remaking the health-care system next month, experts estimate the added cost to the government will be $30 billion to $90 billion a year.

Americans will be forgiven for never taking deficit forecasts very seriously. The track record, beginning long before Mr. Clinton came on the scene, ranges from moderate to ludicrous over-optimism.

In the campaign book, "Putting People First," published last summer, Clinton repeated the same sentence twice, three pages apart: "Our plan will cut the deficit in half within four years and assure that it continues to fall each year after that."

At the time, the deficit for 1997, the last year of the current presidential term, was projected to be about $280 billion. Clinton's promise would leave it at $140 billion. If achieved, that deficit would be lower in absolute dollars than at any time since 1982 and even lower still as a percentage of gross domestic product (GDP).

Last August, the Congressional Budget Office (CBO) set its new deficit forecast for 1997 at $290 billion, not a big difference.

In January 1993, however, CBO adjusted its estimate upward again to $319 billion. That was no longer a number the Clinton team felt it could cut in half, so the team decided to cut the same dollar amount as earlier planned, $140 billion. In the economic plan the president announced Feb. 17, he projected a budget deficit in 1997 of $179 billion.

Another slight adjustment from the CBO in March brought the projected deficit to $322 billion. But other problems arose as well. The White House had miscalculated its savings in entitlement-program trims, especially Medicare, by $17 billion.

It overestimated revenue from tax increases on Social Security benefits by $15 billion.

The White House goal for 1997, as of the release of the Clinton budget request last week, was $205 billion - $65 billion, or almost 50 percent, higher than the $140 billion Clinton promised last summer.

The deficit forecast would have risen higher still except that Congress took Clinton's economic package and added deeper spending cuts of its own. Without them, the 1997 deficit projection would have been $214 billion.

The White House Office of Management and Budget, however, estimates a 1997 deficit of $346.8 billion, without planned deficit reduction through spending cuts and tax increases. This is $24.8 billion higher than the latest CBO estimate, even though both offices use the same economic assumptions. Using the higher deficit projection to work from means the White House can claim larger savings from its program.

The Clinton administration has found another way to cast a favorable shadow on its campaign promise of last summer. By 1997, says budget director Leon Panetta, "what we do is basically cut the deficit-to-GDP ratio virtually in half."

The projected deficit for the current budget year, fiscal 1993, is just under 5.15 percent of GDP. If the deficit target is reached by 1997, then the deficit will be 2.7 percent of the projected GDP. That amounts to a 48 percent reduction.

If these numbers come true, however, it will be a historically rare - though not unheard of - event.

Five years ago, the last Reagan budget projected a $23 billion deficit for the current fiscal year, off by $299 billion, it now appears. Two years later, the 1991 budget predicted the current deficit at $20.1 billion, even farther from the truth. In 1981, Reagan budgetmakers projected a $28 billion surplus by 1986. They got a $221 billion deficit instead.

But there is one pleasant surprise: By this time a year ago, Bush budgeteers were projecting this year's deficit at $352 billion, about $30 billion higher than it actually is.

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