The General Accounting Office's Review of the OMB/CBO Initial Report Under the Deficit Control Act

GAO discussed the Office of Management and Budget's (OMB) and the Congressional Budget Office's (CBO) report on sequestration under the Balanced Budget and Emergency Deficit Control Act. GAO noted that its estimates differed from those of OMB and CBO in that: (1) it believes that the economy will grow at a rate of 2.8 percent in 1987, while CBO estimates a rate of 3.2 percent and OMB a rate of 3.7 percent; (2) it and CBO believe that a substantial part of a federal pay raise should be funded from additional appropriations, while OMB believes that the departments and agencies should absorb the cost; (3) it and CBO believe that 1987 defense outlays will total $5 billion less than OMB believes they will; and (4) it and OMB believe that entitlement programs should be continued at their 1986 levels, while CBO assumed full funding for 1987. GAO also noted that there are uncertainties in the estimates, including: (1) the doubtful assumption that 1987 appropriations will be equal to 1986 appropriations; (2) assumptions about the state of the economy; and (3) the potential effects of the new tax reform law.