- The Washington Times - Tuesday, July 3, 2001

The White House has said for the first time that a slowing economy will result in lower than expected federal revenue this year.
Lagging receipts through the first two quarters of the fiscal years show projected surpluses for fiscal 2001 could be overstated by $20 billion to $30 billion, White House officials told Republican leaders last week.
White House economic adviser Lawrence Lindsey last week painted an even bleaker picture. He said that based on the economy's performance alone the projected surplus of $260 billion for fiscal 2001 could drop to $200 billion, according to media accounts of the closed-door session.
Economists have said for months the economy was growing more slowly than either the Bush administration or the Congressional Budget Office had predicted in January.
"The ramifications of that are every bit as serious and problematic as we said they would be a couple of months ago," Senate Majority Leader Tom Daschle, South Dakota Democrat, said Sunday on ABC News' "This Week." During debate on a 10-year, $1.3 trillion tax cut, Mr. Daschle and other Democrats warned that surplus projections used to rationalize the tax cut were overly optimistic.
"I hate to say 'I told you so,' but we told you so," Mr. Daschle said.
Senate Budget Committee Chairman Kent Conrad, North Dakota Democrat, said that optimists "can remain hopeful for a continued rosy projected surplus, [but] we have an obligation to recognize the realities of our economic performance." He predicted that surpluses over the next decade could shrink by $165 billion.
Mr. Lindsey met with reporters Friday in hopes of deflecting blame for the shrinking surplus. He told reporters, according to the White House, that the economic slowdown had begun before Mr. Bush took office, and that many economists now say the tax cut is well-timed to stimulate the economy.
Treasury Secretary Paul H. O'Neill told The Washington Times yesterday that while receipts might be lower than was projected this year, "because of the tax cuts we are going to have more revenue than we otherwise would have had under the same economic circumstances."
"Look at all of the economic forecasts around. They are all someplace between half a [percentage] point and 11/2 points of higher real growth in the last part of this year and going forward [faster] than we otherwise would have been," Mr. O'Neill said.
He predicted that the surplus for 2002 will actually be higher than the White House predicted in January.
The bottom line, Mr. O'Neill said, is that "the surplus is still going to be well over $150 billion to $200 billion in this fiscal year. It's still going to be a very big number," he said.
The problem with that, Democrats say, is that a surplus of $150 billion would mean that all of the Medicare trust fund surplus would have been consumed and $6 billion of the Social Security trust fund tapped to boot.
"The last thing we should do is to suggest, as they now have, that we ought to dip into Medicare and Social Security. That is wrong," Mr. Daschle said.
White House spokesman Ari Fleischer said that "under the Bush budget, even with these new numbers, Social Security need not be touched. If there's any touching, it's as a result of too much spending by the Congress."
* Don Lambro contributed to this report.

LOAD COMMENTS ()

 

Click to Read More

Click to Hide