Increase in Taxes Not Needed to Cut Deficit, Baker Says
WASHINGTON -- Treasury Secretary James A. Baker, testifying before the Senate Appropriations Committee, insisted that shrinking the federal budget deficit won't require tax increases after President Reagan leaves office.</br></br>Mr. Baker wouldn't budge from his no-tax stance under stiff questioning from Sen. Dale Bumpers (D., Ark.), who argued that spending cuts and economic growth won't be sufficient to balance the budget.</br></br>If the government had paid only for defense, Social Security, Medicare, Medicaid, interest and pensions, and nothing else, the fiscal 1986 deficit would still have been $56 billion and the fiscal 1987 deficit $38 billion, Sen. Bumpers said. "Everybody says, 'If they'd just cut that spending, we could balance the budget.' That's nonsense," he said.</br></br>But Mr. Baker argued that if Congress adopts the president's budget and the administration's economic forecast proves correct, the deficit will narrow to about $23 billion in fiscal 1993. The White House has forecast this year's deficit at $146.7 billion.</br></br>Many private economists and the Congressional Budget Office say the administration's forecast for economic growth is too high and its interest rate forecast too low. Mr. Baker defended the administration's forecasting record, noting that the White House has actually been too pessimistic in its estimates for four of the past seven years.