Deficit Prospect: A Steep Escalation
MR. NIXON'S last official estimate of the federal deficit for fiscal 1971 was $1.3 billion ÛÓa tiny figure of limited economic impact or political significance. But merely shift the decimal point one place to the right, and you will get a deficit figure of $13 billion. That is much closer to the real probability.</br></br>Nancy Teeters, an economist for the Brookings Institution, gets credit for this tongue-in-cheek budget ÛÏrevision.Û But a high Nixon administration official, looking at the tentative receipts and expenditure estimates now making the rounds of the inner circle, says: ÛÏIÛªd hate to tell you how close that $13 billion deficit looks. Give or take $1 billion, and itÛªs going to be right on the nose.Û</br></br>What flows from this realityÛÓwhich has yet to be confessed publicly by the administrationÛÓcould have serious implications for policy. For, although the Nixon administration knows that a substantial deficit is necessary because the economy is weak, itÛªs not good politicsÛÓespecially for RepublicansÛÓto be so mired in red ink. ThatÛªs why Nixon men stick to the outdated $1.3 billion figure.</br></br>The way it looks now, the deficit for fiscal 1971 will run somewhere between $10 and $15 billion, depending in part on how deep the present economic slump cuts into corporate profits and individual income. (Already, according to Mrs. Teeters, the Gross National Product in the first half of this year was running some $35 billion below the potential rate, compared with a modest plus in the first half of 1969).</br></br>Now, bad as such a figure would look in next JanuaryÛªs budget document (if there is a full accounting of it), a projection of that big a deficit for fiscal 1972 would be even worse. Two big Nixon deficits back to back ÛÓthat wouldnÛªt look nice