Little 'mistake' at Treasury adds $17.8 billion to deficit

July 18, 1991|By Knight-Ridder News Service

WASHINGTON -- For all those of us who have goofed in balancing our checkbooks, there was comforting news yesterday from Bush administration Budget Director Richard G. Darman: We are not alone.

Mr. Darman told the Senate Budget Committee that $17.8 billion of an unexpectedly large $67 billion increase in the deficit projection for 1992 was due mostly to a newly discovered mistake in the way tax receipts are estimated.

The error was made by Treasury Department tax estimators, who applied the wrong tax rate to projections for a category of income that includes alimony, royalties, IRA distributions and some pensions, Mr. Darman said.

"As far as we understand, we made a mistake," he told the panel. "There it is; let's face it and move on down the road."

Budget Committee Chairman Jim Sasser, D-Tenn., said that revised tax receipt figures showed a shortfall of roughly $130 billion from previous projections for 1991-1995.

That almost wipes out the $146 billion in new taxes the 1990 budgetagreement was expected to raise in the same period.

"Gnomes in the basement of Treasury are losing us billions of dollars," said Mr. Sasser.

"I feel all those days and weeks at Andrews Air Force Base [site of the 1990 budget summit] were for naught."

Mr. Darman said that Treasury Department tax receipt estimates were based on projections of national income. The projections are broken down by types of income, such as wages, corporate profits, rental income and the like.

Treasury had been applying a 20 percent tax rate to a category of income that includes alimony, royalties and some pensions. But in reviewing their calculations, Mr. Darman said, Treasury experts determined that the government's take from that kind of income was closer to 10 percent.

Just last February, Mr. Darman was telling Congress that the government would have a $20 billion surplus by 1996 as a result of the spending cuts and tax increases in the 1990 budget agreement.

The revised figures project a lingering $56 billion deficit for 1996.

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