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Despite Gramm-Rudman : 1986 Budget Deficit Could Set New Record, Officials Warn

Associated Press

The fiscal 1986 budget deficit may exceed last year’s record $212-billion red-ink figure despite spending cuts made under the government’s new budget-balancing law, Reagan Administration officials said Friday.

There is now “about a 50-50 chance” that the 1986 deficit will top the former record, said officials who spoke on condition they not be identified.

The White House Office of Management and Budget last February projected a $203-billion deficit for the fiscal year that ends Sept. 30. OMB is scheduled to issue a revised forecast in mid-July.

But the officials said a variety of factors--including lower-than-anticipated economic growth and increased farm-program spending--make it clear that the projected deficit level will be surpassed.

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The first round of spending cuts under the Gramm-Rudman budget-balancing law, totaling $11.7 billion, took effect in March.

That law, whose constitutionality is currently under Supreme Court review, calls for the deficit to be reduced to $144 billion in fiscal 1987--which begins Oct. 1--then down in steps to zero by 1991.

Budgets outlines for 1987 that nominally meet the $144-billion target have been approved by both the House and Senate. A conference committee is expected to work on a compromise version this month.


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