• Question
  • CBO Analysis of the President's Budget Submission for Fiscal Year 2009

    Asked on 3/4/2008

    CBO’s analysis indicates the following: If the President’s proposals were enacted, the federal government would record Deficits of $396 Billion in 2008 and $342 Billion in 2009. Those deficits would amount to 2.8 percent and 2.3 percent, respectively, of gross domestic product (GDP). By comparison, the deficit in 2007 totaled 1.2 percent of GDP. Under the President’s proposals, the Deficit would steadily diminish from 2009 through 2012, at which point the budget would be balanced; it would remain close to balance in most years through 2018. Several key factors contribute to that outcome, however. The budget EXCLUDES funding for Military Operations in Iraq and Afghanistan after 2009, incorporates significant reductions in discretionary spending relative to the size of the economy, and allows for a substantial expansion of the impact of the alternative minimum tax (AMT). The President’s budget does NOT provide year-by-year estimates of spending and revenues after 2013. It does, however, specify the total effect of proposed changes in laws affecting taxes and mandatory spending for the 10-year period through 2018. For discretionary spending, the budget provides details only for 2008 and 2009; the request for 2010 through 2013 is provided only in the aggregate. CBO incorporated those total amounts in its estimates and calculated discretionary outlays for the 2014–2018 period by projecting the amount of discretionary budget authority that the President recommended for 2013 and adjusting it for inflation. The President’s budgetary proposals would result in REVENUES that were $2.1 Trillion BELOW CBO’s baseline projections over the 2009–2018 period, largely because of proposed extensions of various provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) and the Jobs and Growth Tax Relief Reconciliation Act of 2003(JGTRRA). The proposals also would lead to outlays that were BELOW CBO’s baseline projections —- by an estimated $1.1 Trillion over the 10-year period -— because of a SMALLER amount of funding for discretionary programs and REDUCTIONS in mandatory spending, PARTICULARLY in spending for MEDICARE. CBO’s analysis reflects the recent enactment of the Economic Stimulus Act of 2008 (Public Law 110-185), which will ADD an estimated $152 Billion to the Deficit for 2008 and $16 billion to the Deficit for 2009 (excluding debt service). The analysis also takes into account recent revisions to CBO’s economic forecast. Collectively, the proposals in the President’s budget would Add $39 Billion to the Deficit that CBO projects for this year under current law. The President’s policies would Reduce Revenues by $9 Billion and Boost outlays by $30 Billion (mostly for Military Operations in Iraq and Afghanistan). If the proposals were enacted, the Deficit this year would total $396 Billion, or 2.8 percent of GDP, according to CBO’s calculations. By comparison, the deficit in 2007 was $162 billion, or 1.2 percent of GDP. In 2009, CBO estimates, the Deficit under the President’s budget would fall to 2.3 percent of GDP, or $342 billion—$136 billion more than the baseline deficit of $207 billion that CBO projects under the assumption that current laws and policies remain the same. Under the President’s budget, Revenues would be $94 Billion LOWER in 2009 than projected in the baseline. The President is proposing a one-year extension of the higher AMT exemption levels enacted through 2007, which would mitigate some of the effects of the tax; that change would reduce revenues by an estimated $70 billion in 2009. Other proposed changes in tax policies would Reduce Revenues, on net, by another $24 Billion next year. NOTE: This is a Booby Trap budget proposal that is meant to explode in the next Administration when the True Deficits are revealed. In the meantime, Americans can deal with rising inflation, a collapsing real estate market, rising credit card costs, record energy costs, etc., etc. RECESSION, THY NAME IS BUSH.

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  • Categories: Your Life in Retirement, Politics and Policy

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