Budget for Fiscal Year 2009 (CRS Report for Congress)
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| Release Date |
Revised Sept. 11, 2008 |
| Report Number |
RL34419 |
| Report Type |
Report |
| Authors |
D. Andrew Austin, Government and Finance Division |
| Source Agency |
Congressional Research Service |
| Older Revisions |
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Summary:
On February 4, 2008, President Bush sent his fiscal year (FY) 2009 budget to Congress. The President's budget predicted a deficit of $407 billion for FY2008 and $410 billion for FY2009, up from $162 billion in FY2007. The Congressional Budget Office (CBO) estimated the FY2008 deficit would total $396 billion if the President's proposals were enacted, about $39 billion more than the current-law baseline. CBO projected that the President's proposals would generate a FY2009 deficit of $342 billion. Tax rebates and business investment incentives enacted in the Economic Stimulus Act of 2008 (P.L. 110-185), which passed in January, will push up the FY2008 deficit by an estimated $152 billion. CBO estimated the on-budget deficit, which excludes Social Security surpluses, for the President's budget proposals would reach $592 billion in FY2008 and $525 billion in FY2009. Budget and economic estimates issued later in 2008 have been less optimistic.
In February, the Administration foresaw a steady improvement in federal finances, including a surplus of $29 billion in FY2013, the last year projected. The FY2013 on-budget deficit was projected at $201 billion. These projections omitted costs of wars in Afghanistan and Iraq beyond FY2008 aside from a $70 billion supplemental request. Federal deficits are projected to rise rapidly after FY2020. Major Administration proposals include extending expiring tax cuts, limiting domestic discretionary spending, and halting the expanding reach of the alternative minimum tax (AMT) for calendar 2008, but not for later years. Medicare and Medicaid were expected to grow more slowly than in recent years.
The FY2009 budget also discusses long-term fiscal problems. According to longer-term projections from the Administration, CBO, and the Government Accountability Office (GAO), the impending retirement of the baby boom generation and rising health care costs will substantially expand spending on Medicare, Social Security, and Medicaid over the coming decades. The long-term growth of outlays, if left unchanged or if not offset by new revenues, could overwhelm the government's ability to finance its obligations.
September 2008 CBO baseline projections, which incorporate costs of the Economic Stimulus Act and legislation affecting housing policy, veterans' benefits, and unemployment benefits, show a $407 billion deficit in FY2008, a $147 billion deficit in FY2013, and a $135 billion deficit in FY2018. CBO baseline projections assume that key tax cuts enacted in 2001 and 2003 (as well as some others) expire as scheduled, real discretionary spending is fixed, and the AMT is unchanged.
On March 7, 2008, the House and Senate Budget Committees introduced budget resolutions (S.Con.Res. 70 and H.Con.Res. 312). The House passed its budget resolution on March 13 by a 212 to 207 vote. The Senate passed its version the next day. The budget conference report, H.Rept. 110-659, was filed on May 20. The Senate passed the S.Con.Res. 70 conference report on June 4, 2008, and the House passed it the next day. This report will be updated as legislative conditions warrant.
