New Study Puts Deficit in 1988 at $175 Billion

Budget director David A. Stockman today said a new economic projection shows the federal deficit at nearly $175 billion in 1988--$70 billion higher than the Senate is forecasting--even if Congress enacts a budget with strict limits.

Stockman told reporters that the Blue Chip Forecast, based on a monthly survey of 50 firms by economist Robert Eggert, is much more pessimistic than the estimates on which both the House and Senate budget plans are based.

The two chambers will attempt to resolve differences between their plans this week in a conference committee.

The House budget projects a 1988 deficit of $124 billion while the Senate indicates the red ink in 1988 will be $104.3 billion--nearly reaching President Reagan’s often-stated goal of cutting the deficit to $100 billion in 1988.

3% Growth Rate

But Stockman said the new forecast, based on an economic expansion rate of about 3%, would leave higher deficits in each of the three years. The House and Senate plans are based on an economic growth rate of about 4%.

He said Congress would have to go back to the drawing board and find additional budget savings if economic growth slows as sharply as the Blue Chip Forecast predicts.

“I personally believe we can do better than the Blue Chip Forecast,” Stockman said. But he noted that the economy has grown just 2% over the last four quarters.

During the first three months of this year, the economy expanded at a feeble 0.7% annual rate, the weakest quarterly performance in more than two years.