Deficit

WASHINGTON -- Even as the White House and Congress struggle to find a compromise plan to balance the federal budget, the outlook for the deficit continues to improve, and the shortfall is likely to come in smaller than either the Clinton administration or the Republican leadership had expected.Government officials attributed the improving outlook to a surge in economic growth and lower unemployment over the past six months that have helped generate more tax revenue and hold down government spending.

WASHINGTON -- The Republican leaders in Congress are reducing their estimate of the growth of the deficit, bringing them much closer to the White House's figures, officials from both sides say, even before the two sides begin budget negotiations in earnest.The new projection not only reduces the size of the problem facing the White House and Congress but also narrows the differences between them.The deficit estimates are a critical part of the budget process since they set the baseline from which the two sides will try to negotiate spending cuts to bring the budget into balance by 2002 while still meeting campaign promises to cut taxes.

WASHINGTON -- Low interest rates, a slightly better-than-forecast economy and a -- of Republican budget-cutting means that the federal deficit for this year will be $33 billion less than expected, according to a mid-year review by White House economists.The deficit for the current fiscal year, which ends Sept. 30, will now be $160 billion, instead of the $193 billion forecast in February, White House economic advisers said.If the Congressional Budget Office agrees when it releases its own mid-term report in a few weeks, the new figures could give President Clinton leverage in dealing with Congress.

WASHINGTON -- President Clinton formally submitted a $1.61 trillion budget to Congress yesterday that essentially tosses the tough fiscal choices ahead into the laps of the new Republican Congress."

Santa Claus or just trying to save his sagging presidency? That's the question about President Clinton in the wake of his Dec. 15 speech promising a "middle-class bill of rights" that included a $60 billion proposed tax cut. Republicans, too, are scurrying to offer tax cut plans, as has the Democratic leader in the House of Representatives, Richard A. Gephardt. The president's plan, like the others, has so far been matched with only much smaller proposals for spending cuts. The bottom line: Is a tax cut needed?

As the economic recovery moves nicely into an expansion phase of the business cycle, the current buoyancy could produce a double payoff if it dampens ardor for a so-called Balanced Budget Amendment and encourages Congress to keep chipping away at the deficit problem. Neither result can be assumed, however. The demagogic appeal of balanced-budget gimmickry is irresistible to too many members of Congress; habitual pump-primers never think the time is ripe for fiscal austerity.Robert Reischauer, director of the Congressional Budget Office, estimates that if the budget were actually balanced by the target year of 1999, as a constitutional amendment supposedly would require, Congress would have to impose tax increases and spending cuts amounting to $600 billion.

President Clinton's $1.52 trillion budget is a lot more credible than the rosy scenarios cranked out in the Reagan-Bush era but it still has huge holes that could throw its projections awry. The fiscal history of recent years is one long sad chronicle of predictions to shrink the deficit that never materialized. If Mr. Clinton can change this pattern, it would be one of the triumphs of his presidency.One factor that shrouds the financial picture is the lack of any provision in the new budget for the landmark health care reforms that First Lady Hillary Clinton's task force is due to propose next month.

Key aides to President-elect Bill Clinton are considering an unusual strategy to attack the budget deficit, in which the Federal Reserve Board would reduce interest rates while the White House pursues a program of spending cuts and tax increases.Such a coordinated approach would be designed to salvage economic growth, despite the array of anti-deficit measures that otherwise could jeopardize the modest recovery."The Federal Reserve has been making veiled hints for years that it might cooperate in such a venture," said a knowledgeable source in the Clinton camp.

President-elect Clinton's vow to halve the deficit within fou years may yet prove to be as elusive a pledge as President Bush's promise of no new taxes. If the recession drags on as leading indicators suggest it will, there is almost no chance he will achieve that goal with the economic program he offered during the campaign. Indeed, Mr. Clinton's greatest nightmare might be a federal deficit doubling rather than halving this year's $290 billion figure in the fourth year of his term.Given this danger, the president-elect would be well advised to make an attack on the deficit his top priority in the revised budget he will offer in January for the 1994 fiscal year starting next October.

WASHINGTON -- The administration is putting the finishing touches on an austere 1992 budget that will still show a record deficit of more than $260 billion, according to budget officials. The deficit will reach more than $330 billion if the large Social Security surplus is not taken into account.The rise in the deficit stems, officials said, from the economy's slide into a recession, which crimps revenues and accelerates spending for unemployment benefits and other programs to relieve hardship.

Maryland's prepaid college plan ended its fiscal year with a $52.4 million actuarial deficit, but the plan's financial outlook improved in the past six months with the help of a tuition freeze and stronger stock market returns. At the end of June, the plan had $445 million in invested assets and enough money to cover projected obligations for the next 16 years, said Joan Marshall, executive director of the College Savings Plans of Maryland, which oversees the prepaid plan. A year earlier, the plan had assets of $533 million and a $58.9 million surplus.

The albatross of accumulated deficits weighing down the Baltimore Symphony Orchestra is expected to get even heavier by the end of the 2006 fiscal year. If current projections hold, that deficit will increase from about $11.8 million to $16.2 million. "There is no one in the organization who believes this is a sustainable situation," W. Gar Richlin, the BSO's interim president and CEO, said in his first interview since taking the job after the sudden departure of the controversial James Glicker almost seven weeks ago. There are many "views on how the deficit got to where it got," Richlin said.

WASHINGTON - A windfall of tax revenues, especially from corporations, has substantially brightened the short-term budget outlook, but beyond this year the deficit is still an unsolved problem, the Congressional Budget Office reported yesterday. For fiscal 2005, the budget office forecast a $331 billion deficit, in line with the Bush administration's latest estimate, issued last month. That compares with the $364 billion deficit that the office forecast in March and the $412 billion that the Bush administration estimated in February.

RIVERSIDE, Calif. - When Van Daele Communities, a builder, put eight new houses on sale here recently, 52 people camped out for as long as four days to have a chance to buy. "We've never seen it like this in 25 years," said Mike Van Daele, the company's chief executive. Housing prices are appreciating as much as $10,000 to $15,000 a week, he said. On the north side of town, new manufacturing plants stretch through what were once orange groves. Some are humming to life with companies making plastic bottles, stereo speakers and other products.

WASHINGTON - The federal deficit will hit a record $480 billion next year, more than twice the level forecast in March, the Congressional Budget Office said yesterday. The nonpartisan agency said the annual budget shortfalls will total nearly $1.4 trillion over the next decade, a stunning reversal from the $5.6 trillion surplus the CBO forecast in 2001. In a sign that the numbers could create trouble for President Bush's re-election campaign, Democrats blamed the higher deficits for a recent jump in interest rates.

THE STORY so far: Summer 2000: Candidate George W. Bush assures voters that his tax cut is affordable. He illustrates his point with four dollar bills. One bill, he says, represents the tax cut; one represents new programs, such as prescription drug coverage; the other two are funds set aside to pay down the debt, strengthening Social Security. He pledges, without qualification, not to dip into the Social Security surplus. Spring 2001: The Bush administration pushes its tax cut through Congress.

THE CALCULUS of collapse could not be clearer: The statewide network of mental clinics must treat as many as 80,000 patients with a budget built for 65,000. Gov. Parris N. Glendening knows the situation and has sent a message to the front lines: Reduce services and stay within your budget. Period. Legislative analysts say the system will rack up a $20 million deficit by the end of this year --"cost containment" or not. It's not surprising, then, that 11 of these clinics have closed in the last year or so. More will go out of business soon if some way is not found to cover costs until July, when a new budget year begins.

THE SIGNS are unmistakable. Maryland is headed for difficult economic days. Yet state leaders don't seem concerned. Yesterday, Comptroller William Donald Schaefer announced a big surplus for the fiscal year that ended June 30 - far higher than expected. But it's due, in part, to technical miscalculations on income-tax receipts during the year, not a surge in the state's economy. And that's still not the whole story. Once you factor in Maryland's growing Medicaid deficit, its welfare deficit, its mental-health deficit and its prisons deficit, there won't be much of a surplus left.

WASHINGTON -- Even as the White House and Congress struggle to find a compromise plan to balance the federal budget, the outlook for the deficit continues to improve, and the shortfall is likely to come in smaller than either the Clinton administration or the Republican leadership had expected.Government officials attributed the improving outlook to a surge in economic growth and lower unemployment over the past six months that have helped generate more tax revenue and hold down government spending.

WASHINGTON -- The Republican leaders in Congress are reducing their estimate of the growth of the deficit, bringing them much closer to the White House's figures, officials from both sides say, even before the two sides begin budget negotiations in earnest.The new projection not only reduces the size of the problem facing the White House and Congress but also narrows the differences between them.The deficit estimates are a critical part of the budget process since they set the baseline from which the two sides will try to negotiate spending cuts to bring the budget into balance by 2002 while still meeting campaign promises to cut taxes.