Federal Budget: Sources of the Movement from Surplus to Deficit (CRS Report for Congress)
| Release Date |
Revised Nov. 8, 2007 |
| Report Number |
RS22550 |
| Report Type |
Report |
| Authors |
Marc Labonte, Government and Finance Division |
| Source Agency |
Congressional Research Service |
| Older Revisions |
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Summary:
The federal budget moved from a surplus of $128 billion in 2001 to a deficit of $413 billion in 2004. In 2007, the deficit equaled $163 billion. This report compares the actual budget balance from 2001 to 2007 to the projection made by the Congressional Budget Office (CBO) in January 2001 to determine what factors caused the budget to move from surplus to deficit. Actual results differed from CBO's projection for three reasons: legislative policy changes, economic changes, and technical changes. Over the past seven years as a whole, legislative changes accounted for about two-thirds of the cumulative shift from projected surplus to deficit. The largest legislative changes that increased the deficit were tax cuts and the increase in military spending in Iraq and Afghanistan. [â¦] Technical changes accounted for about one-fourth of the cumulative shift to deficit over the past seven years. Large technical changes point to the great uncertainty behind budget projections, even over short periods of time. Legislative reductions in revenue and increases in spending since 2001 have been large enough that even if economic and technical changes had been zero (that is, even if CBO's projection had been perfectly accurate), the budget would still have been in deficit from 2003 to 2007. Nor has the decline in the deficit since 2004 been attributable to legislative changes, which have continued to rise in cost over this period. Cumulatively, legislative changes accounted for 98% of the shift to deficit in 2007. This report will be updated annually.
