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31 Tax Foundation's Washington News 1 (1979)

handle is hein.tera/wingnews0033 and id is 1 raw text is: TAX FOUNDATION'S WASHINGTONY. January 29, 1979 31 1 - ~~~Vol. .... No...... THAT $29 BILLION BUDGET DEFICIT: SOME PERSPECTIVES Rightly or wrongly, much of the attention focused upon the budget for the fiscal year 1980 submitted to Congress last week has been directed toward the $29 billion projected deficit. This is not surprising because of the President's emphasis upon holding the deficit to $30 billion or be- low, as a keystone of his anti-inflation program. However, proposing a budget to achieve a significant reduction in the deficit is one thing; actually achieving it is another. Any new budget is fraught with uncertainties, of course, because it must be prepared more than 20 months before the end of the fiscal year to which it applies. In the case of the fiscal 1980 budget, many of the questions which are raised relate to the economic assumptions upon which the estimates are based. For example, yesterday, as the House Budget Committee opened its hear- ings on the new budget, the Director of the Congressional Budget Office presented that agency's assessment of prospects for economic growth, un- employment, and inflation, which were much less optimistic than the assump- tions on which the Administration based its estimates. The CBO director forecast a deficit of $41 billion in fiscal 1980 if that agency's economic assessment proved accurate. Beyond this, there are many uncertainties surrounding the President's spending restraint proposals which threaten his deficit target. Just a few examples--and there are others--are sufficient to make the point. The budget estimates that spending for agricultural programs will be $2 billion lower in fiscal 1980 than in the current year. Such estimates are hardy perennials, based upon optimistic guesstimates of weather conditions and crop production. The budget also proposes certain cutbacks in unnecessary social security benefits at a saving of $600 million, which the Chairman of the House Ways and Means Committee has already indicated are unlikely to be considered this year. The budget also counts on savings to the government of almost $1.5 billion resulting from adoption of the President's hospital cost containment proposal--legislation that could not gain Con- gressional support in the last Congress. To the extent that such savings are not implemented, of course, the spending and deficit totals in the budget will be increased. Apart from such uncertainties, there is one point about that $29 bil- lion deficit figure which tends to be overlooked. Transactions of certain Federal entities which by law are excluded from the budget also show a $12 billion deficit; so, actually, the total deficit which must be financed by borrowing already amounts to $41 billion--not $29 billion.

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