Does The Administration's Budget Overstate The Likely 2004 Deficit?
Publication Date: February 2004
Author(s): Richard Kogan
Special Collection: John D. and Catherine T. MacArthur Foundation
Keywords: Federal budget; Fiscal future; Economic projections
The Administration appears to have noticeably overstated the deficit for the current year, 2004, just as it overstated the 2003 deficit last July.
In issuing its mid-session budget forecast last July, the Administration projected a considerably larger deficit for fiscal year 2003 than the Congressional Budget Office and other analysts were projecting at that time. When, in October 2003, the actual deficit for 2003 turned out to be $81 billion lower than the Administration’s July estimate, the White House trumpeted the difference as good economic news and evidence its policies were working. Yet most of the difference was unrelated to the economy. Two-thirds of the $81 billion difference occurred because expenditures in 2003 were lower than the Administration showed in its July documents.
With the release of the President’s new budget, there again is a difference between the Administration on the one hand and CBO and other analysts on the other hand. Once again, the Administration is predicting a substantially higher deficit for the current year. The Administration may be overstating the size of the deficit for 2004, just as its July budget forecast evidently overstated the deficit for 2003.
Specifically, the Administration is projecting a deficit for fiscal year 2004 of $521 billion. CBO projects a deficit of $477 billion, or $44 billion less. The Administration expects 2004 revenues to be $19 billion lower than CBO does and shows spending as being $25 billion higher.