THE FY 1996 BUDGET DEFICIT:GOOD NEWS AND BAD NEWS
WASHINGTON -- The Concord Coalition today applauded news that the federal budget deficit for FY 1996 was only $107 billion, but warned that unless fundamental budget reform is undertaken, the deficit will rise in each year of the next presidential term and thereafter.
"Unless we change course, 1996 will be as good as it gets," said Martha Phillips, executive director of the Concord Coalition. "The American economy is now sitting in the eye of the deficit hurricane."
Phillips said that while both President Clinton and Congress deserve some praise for enacting legislation that helped cut the deficit from $290 billion in FY 1992 to $107 billion in FY 1996, spending on Medicare, Social Security and other fast- growing entitlement programs will send the deficit soaring once again if reform measures are not taken soon.
Phillips noted that today's "Monthly Treasury Statement" indicates that Medicare is running deeper in the red. The Hospital Insurance Trust Fund (Part A) lost $4.2 billion in FY 1996.
"The growing Medicare deficits underscore the need to restructure the program in preparation for the demographic tidal wave we'll face when baby boomers begin to retire," Phillips said. "Postponing action or applying bandaid fixes will only allow the underlying problems to grow worse. If the president and Congress can't agree on a solution, perhaps the time has come for a bipartisan, blue-ribbon commission."
Other FY 1996 deficit notes:
- The FY '96 deficit of $107 billion does not include money borrowed from the Social Security and other trust funds (approximately $100 billion). Therefore, even with four straight years of declining deficits, the total public debt has risen in the current presidential term from $4 trillion at the end of 1992 to $5.2 trillion today.
- While some critics continue to claim that the national debt and annual deficits are not an important concern, interest on the debt held by the public became our second largest government program in FY 1996, just behind Social Security.