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Letter to the Honorable John R. Kasich [i] (May 1998)

handle is hein.congrec/cbo8471 and id is 1 raw text is: May 5, 1998 Honorable John R. Kasich Chairmnan Committee on the Budget U.S. House of Representatives Washington, DC 20515 Dear Mr. Chairman: Based on Treasury reports of actual receipts and outlays since our March baseline was completed, CBO now estimates that the surplus for 1998 is likely to be $43 billion to $63 billion-$35 billion to $55 billion larger than the $8 billion projected in March. In addition, the strength of revenues this year suggests that the surplus is also likely to be larger in succeeding years than was previously anticipated-by $20 billion to $30 billion in 1999 (resulting in a surplus of $30 billion or more instead of the $9 billion projected in March) and by smaller amounts thereafter. Although CBO has not undertaken a comprehensive revision of our baseline projections, cumulative developments over the past few months indicate that the 1998 surplus will be significantly larger than was previously estimated. About two- thirds of the increase in the estimated surplus for 1998 stems from unexpected revenues. Although smaller than last year, a surge in April tax receipts above the level previously projected has occurred again this year. Due almost entirely to an unanticipated increase in nonwithheld taxes, this April's receipts exceeded CBO's March baseline estimate by about $20 billion. In addition, withheld taxes received in recent months have continued to be strong, reflecting in part higher-than-expected total wages in the first quarter of calendar year 1998. Unless the current growth in withheld taxes slows abruptly, it seems likely that total revenues for 1998 will be from $25 billion to $35 billion higher than the $1,680 billion CBO projected in March-an increase of about 1.5 percent to 2 percent. Similarly, lower-than-anticipated spending through March and a variety of other developments suggest that total outlays are likely to be $10 billion to $20 billion (about 0.5 percent to 1 percent) lower than CBO's March estimate. Spending is lower than expected in a number of areas, most notably for programs of the National Institutes of Health, the Federal Emergency Management Agency, and the Federal Highway Administration. Offsetting collections, which are recorded as negative outlays, are also higher than expected in some cases-particularly for the Federal Housing Administration.

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