A little 'mistake' at Treasury adds $17.8 billion to the 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, 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 revisedtax 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 budget agreement was expected to raise in the same period.

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

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.

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