The Clinton administration's fiscal 1998 budget plan would result in a deficit of at least $50 billion if Congressional Budget Office economic assumptions are used, CBO Director June O'Neill said today.
O'Neill told the House Budget Committee that, using administration spending figures and CBO assumptions, the deficit would "most likely" be larger than $50 billion. "It's unlikely it would be lower," O'Neill said, adding that the CBO will have a complete evaluation of the Clinton budget proposal by the end of the month.
O'Neill also said she is not certain the administration's "trigger" mechanisms would work. Under the triggers, tax cuts would be eliminated and spending reduced if OMB economic assumptions prove overly optimistic. "Across-the-board cuts ... have always been problematic," O'Neill said.
O'Neill said the CBO estimates the Clinton budget would not be in balance because the CBO uses more conservative economic assumptions than the OMB, particularly certain measures of the gross domestic product.
"Although CBO has not completed its analysis of the administration's projections, clearly the differences in comparable projections of both outlays and revenues stem largely from the small differences in economic assumptions," she said. And while the differences are small, she said, they are "significant for policymakers who are aiming to balance the budget in 2002."
House Budget ranking member John Spratt, D-S.C., questioned the CBO's economic assumptions, saying, "This is not an exact science." But O'Neill countered the CBO has had more accurate projections of the size of the deficit than has the Office of Management and Budget.
House Budget Chairman Kasich defended the CBO, saying it was not created as a "tool or lackey" for congressional leaders. And he warned he would resist any attempt by Republicans to adopt rosy economic assumptions to allow Congress to pass a larger tax cut. "I'm not going to go for it," he said.