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July 08, 1976 - Image 5

Resource type:
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Publication:
Michigan Daily, 1976-07-08

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Thursday, July S, 1976

THE MICHIGAN DAILY

Poge five

Fed. deficit may be less than expected E

WASHINGTON UP) - The fed-
eral budget deficit for 1976
could be $9 million less than
estimated three months ago,
largely because the Ford ad-
ministration significantly over-
estimated expenditures, gov-
ernment officials said yester-
day.
One benefit to the economy
of the reduced deficit may have
been "a modest contribution"
to lower interest rates, a Treas-
ury Department official said.
P R E L I M I N A R Y
budget figures for fiscal 1976
won't be known for another
week, but one official said the
deficit could be as low as $68
billion, down from $76.9 bil-
lion estimated by the Office of
Management and Budget (O
MB) in March.
"We're very much surprised
at how low the figures are
coming in," said Dale McOm-
ber, assistant director of OMB
for budget review. The fiscal
year ended on June 30.
McOmber said it is "difficult
to say why" the administra-
tion's estimates have been so
far off, but added it may have
resulted in part because of the
considerable attention given to
government spending in the
past year.
"WE CAN only speculate that
the sheer emphasis on the bud-
get totals and the amounts in
the budget tended to cause peo-
ple to overestimate spending, or

the timing of spending," Mc-
Omber said in an interview.
"All of us have clearly over-
estimated cash outlays in. a
rather widespread fashion," he
added, explaining that the dif-
ferences were not concentrated
in just a few agencies or de-
partments.
During debate on the 1976
budget, both OMB Director
James Lynn and Treasury Sec-
retary William Simon talked of
a deficit approaching $100 bil-
lion if Congress wasn't careful.
Same congressional critics ac-
cused them at the time of using
scare tactics to keep spending
down.
SIMON'S prediction that the
pace of government borrowing
would result in a "crowding
out" of private borrowers from
financial markets because of
rising interest rates also failed
to materialize.
Edward Snyder, a senior trea-
sury adviser for debt research,
said the lower deficit "probab-
ly contributed to a very modest
degree to somewhat lower lev-
els of isterest rates than we
might otherwise have had since
the governments had to borrow
less."
The OMB first revealed it
was revising its budget projec-
tions for 1976 downward sever-
al weeks ago when Deputy Di-
rector Paul O'Neill told a con-
gressional committee the de-
ficit could be in the area of
$72 billion.

BUT McOMBER said the defi-
cit now could be several bil-
lion dollars below that, possibly
as low as $68 billion.
"I'd begin to doubt it could
get below $68 billion," he said.
The Senate and House budget
committees last week estimated
the federal deficit at $71.3 bil-
lion for their version of the
budget, which was $2.7 billion
below projections.
McOMBER SAID 1976 reve-
nues probably will be near the
original estimates of $297.5 bil-
lion. The changes will occur on
the expenditure side, estimated
last March at $374 billion.
He said the administration's
projection of a 1977 deficit of
nearly $45 billion remains un-
changed.
Although McOmber did not
emphasize it as a major cause,
another factor in the reduced
pace of 1976 spending may have
been the switch to a new fiscal
year. Beginning with 1977, the
fiscal year will be the 12-month
period starting Oct. 1, 1976, in-
stead of July, as before.
FISCAL 1976 ended on June
30, the last time a fiscal year
will end on that date, leaving
one-time transition period from
July 1 through Sept. 30.
In past years, government
agencies and departments had
to spend all their controllable
outlays by the close of the fis-
cal year on June 30, or lose
them. This usually resulted in
a burst of spending just before
June 30.

Popping out
Christine Wren, the first fulltime woman umpire in organized
baseball, takes time out to blow a bubble during a Seattle
University Booster Club amateur game in Seattle.

Senate liberals back tax law, revisions

WASHINGTON (/P) - State
liberals are trying to broaden
benefits for low-and middle-in-
come taxpayers in a bill chang-
ing some of the ways the coun-
try raises its taxes.
The liberals are given a good
chance of winning, mainly be-
cause politicians usually find
it hard to vote against tax re-
lief for the masses in an elec-
tion year.
BUT SUCH action could re-
sult in an even higher federal
deficit in 1977 or force the Sen-
ate to take another look at the
tax advantages that generally
are available only to the rich.
When debate on a massive
tax-revision bill resumes July
20, liberals will try to win more
benefits for typical taxpayers
than were voted by the Finance

Committee.
The liberal group contends
the committee bill extends tax
benefits for the wealthy, mean-
ing thase whose incomes are
$50,000 a year or more at the
expense of those earning $25,-
000 or less.
THE BLOC led by Sen. Ed-
ward Kennedy (D-Mass.) seeks
to extend last year's individual
tax cuts through Sept. 30, 1977.
These cuts are worth about
$180 per year to a typical fam-
ily of four. The Finance Com-
mittee voted to allow more than
half the reductions to expire
next June 30.
The Finance Committee adop-
ted a series of measures that
the liberals want removed.
They would:
-Allow deduction of state

gasoline taxes only to the ex-
tent that they exceed $50;
-Require a three-year de-
lay before an expanded retire-
ment - income credit becomes
fully effective;
-Generally eliminate a busi-
ness - expense deduction for
persons who occasionally use
their homes in connection with
their jobs.
A VICTORY by the Kennedy
forces on all three provisions

would cost the Treasury about
$750 million a year. Under the
new budget law, the Senate
would have to raise taxes else-
where or allow a higher 1977
deficit.
In the first two weeks of de-
bate, the liberal group failed to
sell the Senate on "tax reform,"
meaning elimination of special
benefits for the rich and busi-
ness - as the way to pay for
more tax relief for the average
American.

Exhibition
and Sale
Oriental Art
July8&9 HOR
w5*Ok5nd . 2-6
MarSan lt-d2.
FIRST FLOOR MICNICAN UNIO)

TONIGHT at 8 p.m.
MICHIGAN REPERTORY '76
AT THE UNIVERSITY OF MICHICAN
presents
JESUS CHRIST
SUPERSTAR
JULY 5-10
C>

BASEMENT CLEARANCE
1000's of Books
Children's Books-99c
Cloth Classics-79c
Reference Books
WERE 40% OFF
Now an additional 20% off
Paper Textbooks-44c-88c
Other Paperbacks-15c
NOW THROUGH JULY 17th
MCHA:EoT E
HOURS: M-F 9-5, SAT. 10:30-4

Music by
ANDREW LLOYD WEB

Lyrics by
TIM RICE

in the V
Air-conditioned Power Center
PERFORMANCE TIME 8 P.M. JULY 10 MAT. 2 P.M.
Tickets at Power Center Box Office, M-F 12:30-5 p.m.
and all Hudsons

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