The Administration's surplus estimates already assume an economic slowdown in 2001. Furthermore, the budget projections also assume that revenue growth slows markedly in 2001, 2002 and beyond relative to last year's heady pace.
2000 - Actual
2001 - YTD Actual
2001 - Admin Forecast
2002 - Admin Forecast
Thus, while private forecasters may be noting that revenue growth is decelerating in 2001 relative to 2000, this is consistent with the Administration's assumptions. In fact, year-to-date 2001 revenue growth is actually faster than the Administration has forecast - 6.7% compared with 5.5%.
A survey of the nation's top Wall Street and economic consulting firms reveals a range of FY2001 surplus forecasts between $250-323 billion. The average of these estimates is $282 billion, virtually identical with the Administration's $284 billion baseline forecast. While Merrill Lynch's $250 billion forecast has received considerable attention, its baseline revenue assumptions are very similar to those of the Administration. The main reasons that Merrill has a lower surplus estimate are higher expected spending growth and tax cuts in 2001. Furthermore, the Wells Fargo estimate quoted in the press ($225 billion) is not the official company forecast, which is actually in line with the Administration's.