Despite only moderate economic growth and a gradual rise in unemployment, the Office of Management and Budget said Friday it expects a $63 billion surplus by fiscal 2002, the first surplus since 1969.
The forecast, contained in the OMB's mid-year review of the FY98 budget, is generally rosier than a forecast issued by the CBO earlier this week. The CBO Tuesday put the surplus at only $32 billion for FY2002 - half the level predicted by the OMB. Further out, the OMB forecasts a $166.8 billion surplus for FY2007, while the CBO estimates that year's surplus at $86 billion.
However, both forecasts note a short-term growth in federal red ink. The CBO calls for the deficit to rise to $57 billion during FY98 before declining to $36 billion in FY2001. The OMB says the deficit will climb to $58 billion next year and then fall to $41 billion by FY2000 and to $7 billion during FY2001.
As President Clinton announced in August, the OMB expects a $37 billion deficit for FY97, while the CBO expects a $34 billion deficit.
The OMB predicts the near-term rise in the deficit will be accompanied by a relatively sluggish 2 percent growth in the gross domestic product during FY98, FY99 and FY2000, while an improved but nevertheless moderate GDP growth rate of 2.4 percent during FY2001 and FY2002 will accompany the dramatic move to a strong budget surplus by FY2002.
The CBO calls for similar levels of economic growth - an average of 2.3 percent through 2007. The OMB pegs the unemployment rate at close to 5 percent this year, rising to 5.4 percent by 2002. The OMB deficit projections assume the consumer price index will remain at about 2.5 percent.