Report Shows Deficit Diving to $116 Billion: CBO Forecasts Smallest Shortfall Since '81
The federal budget deficit will plummet this year to $116 billion, according to a revised Congressional Budget Office forecast issued yesterday, marking the fourth consecutive year of declining deficits and the smallest annual revenue shortfall since Ronald Reagan took office in 1981.</br></br>CBO's new estimate is virtually the same as one released late last month by the White House Office of Management and Budget and provides the Clinton administration with additional election-year grist for asserting that its anti-deficit and economic policies are working.</br></br>ÛÏItÛªs good news for the country, and it shows how important it is that we continue to use conservative economic assumptions and have all new [tax cut and spending] proposals paid for with specific savings,ÛªÛª said Gene Sperling, a White House economics adviser. In an indirect shot at Republican presidential nominee Robert J. DoleÛªs call for a 15-percent reduction in personal income tax rates, Sperling added that "itÛªs also important that we not return to the supply-side wishful thinking that led to deficits escalating in the 1980s.Û</br></br>The deficit, which ballooned in the 1980s and early 1990s, gradually began to decline during President Clinton's administration, from $255 billion in 1993 to $203 billion in 1994 to $164 billion in 1995. As recently as three months ago, the CBO, CongressÛªs official budget</br></br>But the combination of an improving economy and declining unemployment produced an unanticipated $22 billion revenue surge and a dramatic improvement in the deficit picture, analysts said. At the same time, projected government spending for the year is down by $7 billion from previous CBO estimates.