On February 6, 1997, the President submitted to the Congress a budget for fiscal year 1998. Administration estimates that, if the economy performs as it expects, the basic policies proposed in the budget will produce a surplus of $17 billion in 2002. The President has also proposed an alternative set of budgetary policies to eliminate the deficit in 2002 under the more cautious Congressional Budget Office (CBO) assumptions. Under those alternative policies, some proposed tax cuts would sunset, or expire, at the end of calendar year 2000, and spending would be held significantly below the levels of the President's basic policies in fiscal years 2001 and 2002. As requested by the Senate Committee on Appropriations, CBO has estimated the effects of the President's budgetary proposals using its own economic and technical assumptions. CBO estimates that a deficit of $69 billion would remain in 2002 under the President's basic policy proposals. The alternative policies proposed by the President were designed to eliminate exactly any size deficit that CBO might project under the basic policies. Under those policies, the proposed alternative level of discretionary spending hinges on estimates that CBO makes during the current budget cycle. After CBO estimates the deficit, taking into account the other alternative policies, the Administration will adjust the proposed level of discretionary spending for 2001 and 2002 50 that it is just low enough to ensure that any remaining deficit estimated for 2002 would be eliminated under CBO's assumptions.

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