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October 1976

Large Federal Budget Deficits: Perspectives and Prospects

by Keith M. Carlson

The January 1975 Administration forecast of a $52 billion deficit for fiscal 1978 generated considerable concern among the American people that the budget was “out of control.” This concern took the form of uncertainty regarding expected inflation and the future course of interest rates. From early 1975 to the present, the Federal budget (national income accounts basis) has been in deficit, averaging $67 billion on an annual rate basis.