Agency Says Policies Favor Balanced Federal Budget Soon

The Congressional Budget Office projected Wednesday that, if lawmakers do nothing, this year’s federal deficit will shrink to $5 billion and annual surpluses will take hold starting in 2001.

“The federal budget is likely to be essentially balanced for the next 10 years if current policies remain unchanged,” the report says.

The nonpartisan agency’s forecast was sure to fuel the debate between President Clinton and Republicans over how to divide the windfall among tax cuts, spending initiatives and retiring the $5.4-trillion national debt.

Though Clinton and GOP leaders have said they want to begin retiring the debt, Republicans have talked of making broad tax cuts. Clinton and many Democrats want small tax reductions plus expansions of Medicare, child care and other programs.

The CBO said it envisions that the deficit for fiscal 1999, which begins Oct. 1, will be just $2 billion. That means that Clinton’s promise Monday to propose a balanced 1999 budget next month should require relatively small trims, considering that it will be a $1.7-trillion spending plan.

Clinton said the administration expects this year’s deficit to be less than $22 billion, well above the CBO’s $5-billion projection. But Lawrence Haas, spokesman for the White House budget office, said the two agencies’ deficit forecasts are very similar.