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The Office of Management and Budget joined the nonpartisan Congressional Budget Office in projecting a fiscal 2017 budget deficit of around $700 billion.
In a July 14 update, the White House OMB said it expected the 2017 deficit to total $702 billion, slightly higher than the $693 billion the CBO projected June 29 in its update. In May, using the same economic assumptions as in the new report, the OMB had estimated a smaller deficit of $603 billion.
If the CBO and OMB projections are correct, 2017 will mark the second year in a row the deficit will have grown and the largest annual shortfall since 2012’s $1.087 trillion.
The OMB blamed the projected increase in the deficit on revenue coming in slower than projected, a pattern the CBO had also noted.
“Receipts for 2017 are now projected to be $3.3 trillion, $116 billion lower than projected in the Budget. The decrease is primarily due to lower-than-anticipated collections of 2017 individual and corporation income tax receipts,” the OMB said.
Some economists have suggested the weakness in receipts is due to taxpayers taking steps to delay receiving income they would otherwise ordinarily receive in hopes it will be taxed at a lower rate in the future, if Congress overhauls the tax system as Republicans have said they will do. The CBO has said the receipt weakness is more than can be explained by a slow economy.
“Most of the shortfall in tax payments this year reflects smaller-than-anticipated payments arising from economic activity in 2016. The reasons will be better understood as detailed information from tax returns for 2016 becomes available over the next year,” the CBO said in June.
For 2018, the OMB projected a deficit of $589 billion, slightly above the CBO’s $563 billion projection.
The OMB report came as House Republicans said July 14 they plan to have a committee markup of a 2018 budget resolution in the week of July 17. The budget outline, should it be approved by both the House and Senate, is expected to set the broad parameters for the GOP’s plan to revamp the tax system later in the year.
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To contact the editor responsible for this story: Paul Hendrie at pHendrie@bna.com
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