A Revenue Surge That Caught The Omb By Surprise

Disclaimers to the contrary, there's evidence that the strength of the economy in the third quarter was as much of a surprise to the Bush Administration as it was to the Democrats. In late July, just two months before the end of the fiscal year, the Office of Management & Budget projected the fiscal 1992 federal deficit at $333.5 billion--a number that proved some $43.3 billion too high.

Economist John Youngdahl of Goldman, Sachs & Co. notes that one major reason omb missed the boat was its underestimation of corporate and individual tax revenues and of payroll-tax receipts. Corporate taxes came in $6.1 billion above projections, while payroll taxes and personal income taxes were $7.7 billion above the late July estimate. "The third-quarter jump in tax receipts," says Youngdahl, "indicates that the economy's surge was both real and apparently unexpected."

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