A Recipe for an Economic Calamity: Deficit Shock: Will it Grow Even Larger?
Did you ever think youÛªd see the day when a 3100 billion federal budget deficit, or a fraction less, would be considered the equivalent of fiscal integrity? Neither did I. Yet, thatÛªs what responsible Democrats and Republicans are shooting for in fiscal 1983ÛÓand to get the deficit sliced to that level will require a combination of tax increases and budget reductions of about $85 billion.</br></br>That looks to be almost impossible. It means that the Republicans and Democratic negotiators striving for a solution to what Treasury Secretary Donald Regan now calls a ÛÏmessÛ will have to find some 830 billion to 335 billion in budget savings, over and above 356 billion worth of adjustments (some of them highly unrealistic) already recommended by the Reagan administration in the budget it sent to Con- gress in January. In his package, for example, the president was counting on picking up $14.8 billion in accelerated oil leasing on the Outer Continental Shelf and in other management initiatives.</br></br>is a bit of a shock to look back at the actual text of President ReaganÛªs ÛÏProgram for Economic Recovery,Û issued just over a year agoÛÓon Feb. 18, 1981ÛÓand find a forecast that the deficit for fiscal 1983 would be a mere $23 billion, leading to an actual balance in fiscal 1984.</br></br>publicized effort to get it down to or below the $100 billion mark, the working assumption on both sides is that the 323 billion deficit has ballooned to about $182 billion.</br></br>The $182 billion represents a $25 billion jump just since Feb. 5, when the equivalent ÛÏbaselineÛ deficit estimate by the Congressional Budget Office was ÛÏonlyÛ $157 billion, and the CBOÛªs most pessimistic alternative guess was ÛÏonlyÛ $169 billion. CBOÛªs ÛÏbaselineÛ figure is keyed to what appears to be ÛÏattainable improvement in economic conditionsÛÛÓthat is, moderate economic growth with sustained progress in cutting inflation and the jobless rate.