Skip Navigation

Chairman Kasich and Members of the Committee, I am pleased to be with you this morning to review the budgetary plan that the Clinton Administration set forth in the Mid-Session Review of the 1996 Budget issued on July 31. The budget that the Administration submitted in February for fiscal years 1996 through 2000 would not have substantially changed the projected budget deficits. By contrast, the Administration's revised budgetary plan for fiscal years 1996 through 2005 includes reductions in corporate subsidies and additional spending savings designed to make large reductions in the federal deficit (see Figure 1). In my statement today, I will describe the Congressional Budget Office's (CBO's) preliminary assessment of the Administration's new plan and explain the differences between CBO's estimates and those of the Administration.

CBO previously analyzed the initial version of the Administration's amended budget--released on June 13--in testimony that I presented to the Joint Economic Committee. The assessment that I am providing today has been revised to incorporate changes the Administration has made to its proposals since June 13. However, because those changes are relatively minor, this analysis differs from our earlier one only in the details.

CBO's estimates of the President's budget are based on CBO's April 1995 baseline projections. CBO is in the process of updating those projections, but the new baseline will not be released until later this month. Because both the budget resolution adopted by the Congress and CBO's estimate of the President's February budget were based on CBO's April projections, using that same baseline for the estimate of the President's July budget makes it easier to compare the changes in fiscal policy proposed in the two budgets submitted by the President and in the budget resolution. In addition, CBO anticipates that the revisions it is currently making to its baseline projections will not substantially affect the analysis of the President's budget.

The baseline deficits for 1995 and 1996 will be lower than CBO projected in April. The deficit in 1995 is expected to be between $160 billion and $165 billion instead of $175 billion. Nevertheless, CBO's August projections of the deficit in the years after 1996 are likely to be quite similar to the earlier projections. Thus, using CBO's August baseline assumptions would bring CBO's estimate of the deficits under the President's policies closer to the Administration's estimates in the years 1995 and 1996, but would not substantially affect the estimates for later years.

This document is available in its entirety in PDF.