Record ‘92 Deficit Seen by Congress Budget Agency
A faltering economy, weak tax collections and rapid growth in Medicaid costs will push the federal deficit to a record high next year and delay a balanced budget until well into the future, the Congressional Budget Office said Thursday.
The red ink will total $362 billion in 1992, up from a projected $279 billion this year, the budget office reported in its midyear review of the budget and the economy. The figure is close to forecasts given by the Bush Administration.
But, although the Administration predicts a steady decline in the deficit to $55 billion by 1996, the budget office projects a $156-billion deficit in that year, with continuing shortages in the range of $170 billion to $190 billion.
The budget office cited these reasons for the gloomy forecast:
--Slower economic growth, resulting in lower incomes, lower taxes and higher outlays for interest and certain benefit programs, such as food stamps.
--An unexplained weakness in collections of income taxes. Final payments for 1990 were below expectations, as are taxes withheld so far in 1991.
--Spending for Medicaid, which pays for medical care for low-income people, is soaring, in part because court cases and changes in regulations have forced states to increase reimbursements to hospitals and nursing homes.