Last week, the Office of Management and Budget (OMB) released revised budget estimates that showed the federal government will be up to $165 billion in deficit spending for fiscal 2002. OMB predicted a smaller budget deficit for the next fiscal year-but only if Congress can curb its spending.
The OMB, which acts as the budgetary arm of the White House and assists the President in overseeing the preparation of the federal budget, said that new spending, tax cuts and significantly lower tax revenue will result in a deficit of as much as $165 billion this year. Nearly all of the decline in tax revenue is expected to come from losses in capital gains taxes.
This year’s deficit marks a dramatic change from just one year ago when the federal government maintained a $127 billion budget surplus. Many analysts believe that President Bush will be unable to make the 2001 tax cuts permanent without a brighter economic future.