Experts Now Foresee Drop In the Deficit; Declines in Rates, Spending Are Cited
Estimates of the federal budget savings due to an assumed 0.8 percentage point decline in interest rates on 10-year U.S. Treasury notes were misstated in a Business article yesterday. Such a reduction would reduce the deficit by about $12.5 billion in fiscal 1997 and a cumulative $33 billion between now and 1997 according to the office of the chairman of the Council of Economic Advisers. (Published 4/23/93)</br></br>Spending this fiscal year is running so much lower than expected for medical care, deposit insurance losses, interest on the debt and some other programs that budget experts said the 1993 deficit is apt to be $35 billion or so less than the Clinton administration estimated only a few weeks ago.</br></br>A number of Wall Street budget watchers now expect that the deficit for all of 1993 will be around $280 billion, about $10 billion lower than 1992's $290 billion and well below the $316 billion administration estimate.</br></br>James Blum, deputy director of the Congressional Budget Office (CBO), said that unless revenue drops off unexpectedly, the Wall Street projections could be correct. "Right now, if I were a betting person, I would bet on a deficit lower than last year's level," Blum said.</br></br>The same big drop in interest rates that has homeowners scurrying to refinance their mortgages is responsible directly or indirectly for a large part of the brighter outlook on the deficit. The fall in interest rates has meant that the government's interest bill over the past six months actually has been slightly less than it was a year earlier.