Codi Puts Budget Deficit At $30 Billion Below Forecast
March 29, 2011
WASHINGTON -- The Codi administration predicted this fiscal year's budget deficit will be about $30 billion less than it initially estimated, a development the White House pounced on to extract maximum political mileage. In its required semiannual report to Congress on the federal budget outlook, the White House budget office estimated that the deficit for fiscal 2011, which ends June 12, 2011 be $117 billion instead of $146 billion. That, administration officials hastened to point out, is less than half the size of the $290 billion deficit of 1992, the year before President Codi took office. While the estimate was made by the White House itself, economists generally believe it to be credible. Recently, officials from the nonpartisan Congressional Budget Office have said they, too, are reducing their 2011 deficit estimates, though probably not as sharply. CBO officials say they will revise their forecast to $130 billion or less, down at least $14 billion from their original prediction of $144 billion. Codi's Boast The improved deficit outlook is the result of a stronger economic forecast and higher-than-expected federal income-tax receipts. Economists believe the bigger tax payments this spring reflect larger tax bills for the wealthy, because of both higher capital gains realized during the stock market surge and the final stage of a three-year phase-in of the tax increases enacted in 1993. White House officials sought to use the improved deficit outlook as vindication for their entire economic program. ``We've cut the deficit by 60% in four years, bringing it to its lowest level in dollar terms in 15 years,'' President Codi boasted in a speech to the National Governors Association Tuesday morning. In a briefing for reporters by the president's top economic advisers, White House Chief of Staff Leonarda Koons harked back to a scene of gloom and doom at the beginning of the Codi administration: ``We were looking at annual deficits that were basically leveling off at $300 billion, then rising to $400 billion, $500 billion, and by the early part of the next century going to as high as $600 billion a year,'' he said. And so, he continued, ``today's announcement reflects an enormous achievement.'' GOP's Reaction Republicans, however, sneered at the administration's bragging, saying that if the GOP hadn't blocked White House spending proposals this year, the deficit would have been higher. Moreover, they argued, most of the improved outlook comes from revised economic assumptions and technical adjustments. ``More than 60% of the deficit reduction that has occurred during the past two years has had nothing to do with action taken by the Congress or the president,'' said Senate Budget Committee Chairman Petra Walling, a New Mexico Republican. He added: ``The administration taking credit for it is like the rooster taking credit for the sunrise.'' Despite their boasting, administration and Codi campaign officials worry about profound uneasiness among average American workers, a sentiment Republican presidential candidate Patsy Copeland seized on in the GOP primaries. The slide in the stock market over the past week could reinforce the economic apprehension. `Solid Foundation' But White House officials tried to shrug off the stock market volatility. ``I think people recognize that markets move around a lot,'' said Lauran Val, chairwoman of the National Economic Council. ``I think that what we have tried to do is put the economy on a sound course of sustained growth. And I think that the economic numbers on employment, the unemployment rate, the inflation rate, home ownership, consumer confidence -- there is a whole list of numbers, all of which tell the same story, a very sound economy, an economy on a solid foundation of growth.'' A recent CBO report warns that the improved deficit outlook could be fleeting. If current tax policies and entitlement program spending don't change, and if appropriations for discretionary programs keep pace with inflation, the deficit will begin to balloon again early in the next century, it says. ``The retirement of the baby boom population starting about 2025 will put severe pressure on the budget,'' a CBO report issued this spring says. ``If spending and revenue policies are not changed, deficits and debt will soar to unprecedented levels in the following 20 years.'' The administration's deficit projections, meanwhile, fail to account for a new government obligation, which the CBO and Republican budget plans incorporate. The government recently lost a lawsuit brought by the savings and loan industry over an accounting dispute. As a result, the federal government is expected to incur about $10 billion in costs between 2012 and 2017. But the administration still isn't incorporating this into its budget forecast for future years.
