WASHINGTON -- The Office of Management and Budget yesterday dramatically revised its budget deficit forecast, reflecting a substantial recession-induced shortfall in tax receipts and a major shift from this fiscal year to the next of deposit insurance outlays and Desert Storm costs.
For the year ending Sept. 30, the OMB projected a $282.2 billion deficit, down $35.9 billion from its February forecast of $318 billion. On the other hand, it is now saying next year's deficit will reach the astronomical level of $348.3 billion -- $67.4 billion higher than its previous forecast and far higher than even the most pessimistic private predictions.
Private forecasters had been expecting a major shift into next year of costs connected with the war and the thrift bailout. And, as expected, the largest revision in the OMB forecast is a $29.9 billion carryover into next year of deposit insurance outlays for failed banks and thrifts that had been anticipated this year.
The total of thrift and bank-related borrowing is now estimated at $83.5 billion in 1991 and $118 billion in 1992, the OMB said.
The budget office acknowledged that its estimates of Persian Gulf war costs for this year were too high by $33.4 billion. The reason, it said, was the rapid receipt of $48.2 billion of foreign contributions, which has outpaced the rate of spending on personnel and materiel used and lost during the war.
On top of the major year-to-year spending shift, the OMB said that individual income tax collections have been running substantially lower than expected this year, apparently due to the recession. Thus, it was forced to reduce its estimate of tax collections this year and next by $22.8 billion and $19.5 billion, respectively.
While its receipts estimates reflect a falloff in employment-related taxes, the budget office did little to revise the administration's economic forecast from earlier this year. It said that so far the recession has been consistent with its "short and shallow" forecast.
In line with its altered deficit forecast, the OMB revised its estimate of borrowing from the public to $271.3 billion in 1991 and $345.2 billion in 1992.