ROANOKE TIMES
Copyright (c) 1997, Roanoke Times
DATE: Monday, March 10, 1997 TAG: 9703100104
SECTION: EDITORIAL PAGE: A-6 EDITION: METRO
Work on reducing the federal deficit is important, but be skeptical about claims of precision for the fiscal future.
LET'S ASSUME President Clinton and the Republican Congress come to an agreement on a plan for producing a balanced budget by 2002. That seems plausible, since neither the administration nor Congress seems eager for a replay of the budget impasse that led last year to a partial government shutdown.
Let's also assume, less plausibly, that such an agreement will contain no tax cuts for the favored, no backloading of the least politically palatable parts until the latter years of the deal, no rosy scenarios.
Finally, let's assume faithful adherence to the plan by future presidents and Congresses.
If it results in a balanced budget in 2002, it'll still be only by chance. That's because, in an economy as huge and complex as America's, federal budgeting is guesswork under the best of conditions.
Since 1980, official deficit projections, made just 18 months in advance, have turned out to be off by an average of 21 percent. Sometimes the projections proved too high, sometimes too low. Initially, for example, the deficit for this past fiscal year was projected at about $175 billion. It came in at $107 billion.
Economists' estimates vary widely for the deficit for the current fiscal year. The administration's estimate is $126 billion. An economist at the Massachusetts consulting firm of DRI/McGraw-Hill projects a deficit of $117 billion. Factoring in economic growth and soaring stock prices, the chief economist at Macroeconomic Advisers in St. Louis is figuring an $83 billion deficit. All this for a fiscal year that's nearly half over!
The administration and Congress shouldn't give up on long-range budgeting. Much less should they abandon the budget-balancing endeavor. But when the arguments get down to $10 billion, $20 billion or even $30 billion differences over a federal budget five years in the future, keep in mind that nobody has much of a clue.
LENGTH: Short : 43 linesby CNB