WASHINGTON - The fiscal 1992 deficit will be closer to $350 billion than the $400 billion the Office of Management and Budget predicted earlier this year if Congress continues to delay the authorization of thrift resolutions, OMB director Richard Darman said yesterday.
The OMB is scheduled to officially revise its deficit estimate on July 15. Mr. Darman said that the amount the agency's earlier projection will be lowered hinges almost entirely on what happens with Resolution Trust Corp. spending between now and the end of the fiscal year on Sept. 30.
Thrift-related spending could be $40 billion to $50 billion lower without further action by Congress, he said. Revisions in other areas will amount to only "a couple of billion dollars," he said.
While a lower deficit estimate means the Treasury is not likely to run up against its $4.2 trillion debt limit before the end of the year, Mr. Darman said it would still be "prudent" for Congress to enact a debt limit increase before adjourning before the elections this fall.
"We will need a debt increase by February or March under the best scenario," he said.
President Bush is likely to initiate budget negotiations with Congress early next year aimed at eliminating the deficit within five years, by 1998, if he is re-elected, Mr. Darman said.
The administration expects that the elections will produce "125 new members of the House, who will come in with fresh minds" and be willing to vote for the major reductions in health care and other spending programs that the administration believes is necessary to balance the budget, he said.
"It will be possible to do it during the honeymoon period right after the elections," he said, adding that the current "partisan climate" prevents any meaningful action before then. "We've fallen into a ritual of confrontation that doesn't get things done," he said.
"The budget problem is large and frustrating, but it is definitely manageable," he said, adding that resolving the problem will not "require counterproductive tax increases or an attack on Social Security."
The administration has been pushing as its principal deficit reduction proposal a cap on Medicare, Medicaid, and other federal entitlement programs that have been growing faster than the general rate of inflation. Mr. Darman said that along with stimulative legislation, the cap would suffice to balance the budget in the next five years.
The administration's budget plan assumes a growth rate of about 3.2% a year, a rate Mr. Darman described as "reasonable" and close to the country's historical average, not "heroic," as some have charged.
By contrast, Mr. Bush's opponents in the presidential campaign have adopted enormously optimistic assumptions in outlining their plans to reduce the deficit, he said.
According to the OMB's analysis, the deficit reduction plan recently put forward by Arkansas Gov. Bill Clinton assumes a growth rate of between 3.6% and 5.5% a year to achieve a balanced budget, he said.
"His plan amounts to nothing. It just shifts money around" within the budget, he said. And yet it is far more "serious" and "intellectually valid" than the ideas proffered so far by Ross Perot, an undeclared candidate, he added.
The total savings from one of Mr. Perot's much publicized ideas - eliminating eliminating Social Security benefits for billionaires - would be about $110,000 a year, according to OMB estimates, Mr. Darman said.
To achieve the promised $20 billion a year of savings, Mr. Darman said, he would have to eliminate benefits for all current recipients who earn over about $50,000.