An Analysis of President Reagan's Budgetary Proposals for Fiscal Year 1990

The Congressional Budget Office CBO projects that, under current budgetary policies, the federal government deficit would decline only slightly--from 159 billion in 1989 to 146 billion in 1990 and 1991 and to 135 billion in 1993. The Reagan Administration proposes large reductions in nondefense spending, which would reduce the projected deficit to 120 billion in 1990, 108 billion in 1991, and 80 billion in 1993. But this improvement falls short of that required by the Balanced Budget and Emergency Deficit Control Reaffirmation Act of 1987, which calls for a deficit of 100 billion in 1990 and a balanced budget by 1993. The Reagan Administration was able to claim that its budget program met the acts targets by assuming much stronger economic growth and lower inflation and interest rates than CBO and most private forecasters, and by adopting more optimistic technical estimating assumptions.