WASHINGTON -- The Congressional Budget Office came out yesterday with the government's first official estimates of the 1992 budget deficit, and the figures went all the way from $186 billion to $354 billion.
What number is picked from that wide range depends, the CBO said, on what is counted in -- and out.
The favorite choice of CBO Director Robert D. Reischauer, who appeared at a hearing of the House Budget Committee, was at the low end -- in keeping with the views of most economists.
But panel members zeroed in at the top of the range as they fretted that all the anguish and political capital spent last fall to xTC reach a deficit-reduction package appeared to be coming to naught.
"We're never going to see the light at the end of the tunnel," said Representative Leon E. Panetta, D-Calif., the committee chairman, as he noted that the full cost of Operation Desert Storm was not included in any of the figures. "There is something fundamentally wrong here."
But Mr. Reischauer, a former economist at the Brookings Institution and adviser to Michael S. Dukakis in the 1988 presidential campaign -- and a man not overly given to optimistic forecasts -- assured the House members that the deficit would be on a sharp downward path in coming years.
He predicted that by 1995 it would range from $57 billion to $170 billion, again depending on what is being counted and on whether Congress abides by last fall's $500 billion deficit-reduction package of spending cuts and tax increases.
If the low estimate is right, the deficit in 1995 will be the smallest in relation to the size of the economy in 20 years, Mr. Reischauer said.
"There is no reason to be overly pessimistic," he said. "In the long run, substantial progress will be made if you stick with the agreement" from 1990 to cut the deficit."
The biggest deficit numbers, projections for what would be by far the largest on record -- topping $300 billion in the 1991 fiscal year and again in 1992 -- result from counting the impact of the recession and the cost of the savings and loan and bank bailouts.
In addition, to conform to last year's deficit accord, the surplus rapidly gathering in the Social Security system was excluded in calculating the $300 billion-plus figures.
Previously, this large surplus had been included in estimates, bringing the deficit down substantially. But Congress switched the accounting policy in the interest of "honest bookkeeping." Lawmakers contended that these funds were supposed to be set aside to pay future benefits and should not be counted in the overall federal budget.
But in keeping with the long-held views of economists, Mr. Reischauer told the House panel that any realistic deficit projection should include the Social Security surplus.
Deficits only take on meaning, he argued, in terms of their impact on the economy, and therefore "it is not meaningful" to leave out such a big item as Social Security.
Automatically, the 1992 deficit projection would fall to $284 billion if the Social Security surplus were counted, a drop of $70 billion from the top figure of $354 billion.
But even the $284 billion figure is too high, he said, because it includes $98 billion to pay for the bailout of the thrift and banking industries.
He cited two reasons for excluding these costs from deficit projections in terms of analyzing the impact of the deficit on the economy:
* Unlike regular government expenditures, the bailout funds are spent to replenish deposits in failed institutions. These deposits probably will not be spent any more rapidly than if the bailout had never occurred.
Therefore, Mr. Reischauer said, the rescue of the S&Ls and banks would have no impact on the economy and interest rates. Other government programs, however, must be financed by draining resources from the economy, and that can raise rates.
* The bailout itself, he said, was "temporary." Money the government spends in 1991 and 1992 to buy up assets from insolvent institutions would be recovered in coming years, he said, and the higher deficits of 1991 and 1992 would be offset at that point.
"These large, year-to-year swings in deposit insurance spending not represent changes in the federal government's effect on the economy and have little impact on interest rates," he said.
To reach his deficit number of $186 billion for the 1992 fiscal year, which starts Oct. 1, Mr. Reischauer counted the Social Security surplus and excluded the bailout cost.