Word: grammes
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Congress is still weary from its struggle with the 1987 budget. In the end the lawmakers decided to let federal spending pass the once inconceivable $1 trillion mark this year. Their final spending bill anticipated a deficit of $154 billion, as permitted by Gramm-Rudman. But the Congressional Budget Office now projects a 1987 deficit of $174.5 billion, and some private economists say it may go as high as $190 billion...
...many ways Reagan's 1988 budget seems like a wishful blueprint for a miracle. The President proposes to slash the deficit to $108 billion, the 1988 target prescribed by the Gramm-Rudman law, without a tax increase and while still boosting defense spending by 3%, after adjustment for inflation. The deficit reduction would come entirely through further cuts in social and other nondefense spending, along with short-term expedients like sales of Government assets. But private economists are almost universally doubtful that the formula can work. Charles Schultze, a Brookings Institution scholar who was President Carter's chief economic adviser...
...Reagan has proposed spending $1.02 trillion against expected revenues of only $916 billion. He thus becomes the first President to send a trillion dollar budget to Capitol Hill. His proposals call for the deficit to be cut to the $108 billion Gramm-Rudman target through a combination of $42 billion in spending reductions and revenue increases. Some $20 billion of that would be trimmed from domestic programs, including mass-transit aid, housing assistance and farm subsidies. Social Security, as usual, remains untouchable...
More and more economists and Congressmen believe the current Gramm-Rudman target for fiscal 1988 is unrealistic and needs to be revised. If Congress made too drastic a cut in the deficit, they argue, it could throw the sluggish economy into a recession. Says C. Fred Bergsten, director of the Washington- based Institute for International Economics: "I don't think anybody believes that it is either possible or desirable to meet the Gramm-Rudman target." Admits Chiles: "There is nothing magic about $108 billion. But I think you have a problem if you abandon it without something better...
...many investors are buying up dollar-based securities. But TIME's board expects the slow progress in making budget cuts to continue next year. The deficit in fiscal 1987, which ends next October, will probably ease to $190 billion -- still well above the $144 billion target established by the Gramm-Rudman deficit-reduction law. The economists believe the Iran-contra scandal, among other issues, could distract congressional attention from the job of slashing the fiscal 1988 budget...