Domenici Press Release 7/16/96

Federal Government
Senator Pete Domenici Press Release

DOMENICI NEWS: DEFICIT REDUCTION TRUTHS

FOR IMMEDIATE RELEASE                    CONTACT:  CHRIS GALLEGOS
July 16, 1996                                      (202) 224-7082

DEFICIT DECLINE NOT DUE TO CLINTON POLICIES

WASHINGTON -- Senator Pete Domenici of New Mexico, chairman of the Senate Budget Committee, today said suggestions by Clinton Administration officials that their policies have produced significant deficit reduction is like the rooster taking credit for the sunrise.

While emphasizing that a continued decline in the federal deficit is good news, Domenici dismissed President Clinton's assertions that his administration can take credit for the drop.

Rather, Domenici emphasized the bulk of deficit reduction has been due to a re-estimate of the money needed to bail out ailing savings and loans, Democrat-inspired tax increases, and Republican- initiated spending curbs.

While cumulative deficit reduction over the past three years totals $407 billion, the administration should only take credit for the $121 billion in deficit reduction that resulted from its 1993 tax increases, Domenici said.

"I am pleased that deficit estimates have dropped," Domenici said. "But to suggest it is the result of administration policies is not accurate. The simple fact is, more than 60 percent of the deficit reduction that has occurred during the past two years has had nothing to do with actions taken by the Congress or the President."

The deficit during the past three years has been $407 billion less than originally estimated. But, Domenici said, $197 billion of the deficit drop can be attributed to savings resulting from so- called "technical re-estimates" or savings not resulting from changes in economic conditions or enactment of specific laws. Another $51 billion in savings can be attributed to revised economic estimates, $121 billion from net Democrat-proposed tax increases, and $26 billion from Republican-inspired spending curbs.

A new report by the Office of Management and Budget states that this year's deficit will be reduced to $117 billion, which is more optimistic than recent Congressional Budget Office estimates. In either case, clearly there has been a noted drop in the deficit from FY 1993's $255 billion level.

Domenici went on to explain that over 60 percent of the deficit reduction in the last two years had nothing to do with actions by Congress or the President. The reduction is largely a result of revisions in technical assumptions and economic forecasts. The amount of reduction and the reasons behind the drop were laid out as follows:

The cumulative deficit reduction totaled $406 billion over those four years, fiscal years 1993-1996. Where the $406 billion came from:

Revised Economic Forecasts: $51 billion or 13 percent; a stronger than projected economy resulting in higher than expected tax collections were the main cause of this deficit reduction source. The prudent policies of the Federal Reserve, which have kept inflation low and growth steady since the beginning of this recovery in early 1991, are largely responsible for this economic growth.

Legislative Changes: $159 billion or 39 percent.

Within the category of legislative changes, President Clinton's 1993 tax hikes resulted in $121 billion or 76 percent of legislative deficit reduction.
In addition, spending cuts were responsible for a mere $26 billion or 6 percent of cumulative deficit reduction between FY 1993-1996. $19 billion or 73 percent of spending cuts were part of the cuts which were made during the 1996 Appropriations process.