Administration's Latest 2004 Deficit Projection Appears Overstated; Will Final Deficit Figure Be Presented As Progress In Deficit Reduction?

Publication Date: August 2004

Publisher: Center on Budget and Policy Priorities (Washington, D.C.)

Author(s): Richard Kogan

Research Area: Economics

Keywords: Economic projections; Fiscal future; Federal budget; National debt

Type: Report

Abstract:

On August 2, three days after the Office of Management and Budget (OMB) projected that the fiscal year 2004 deficit will total $445 billion, the Treasury Department issued data indicating a deficit of $418 billion, nearly $30 billion below the OMB projection. Similarly, the latest deficit forecast from the Congressional Budget Office (CBO), issued August 5, projected a 2004 deficit of $422 billion, more than $20 billion below the OMB figure. OMB itself has acknowledged that its $445 billion figure is probably too high.

These facts strongly suggest that the final deficit figure for 2004 will be in the $420 billion range, below the OMB estimate of $445 billion. This somewhat lower deficit figure will not be due to a brightening deficit picture over the next two months but rather to OMB’s forecast being too high in the first place. In fact, at $420 billion, the 2004 deficit would be $45 billion higher than the 2003 deficit and would also constitute a larger share of the Gross Domestic Product (3.6 percent, up from 3.5 percent in 2003).