Between January 2001 and January 2005, the Congressional Budget Office (CBO) reduced its 10-year baseline projection for the period 2002-2011 from a peak surplus of $5.6 trillion to a deficit of $2.6 trillion for three reasons. First, about one third of the reduction is due to technical revisions CBO made to its projections (e.g., to account for the smaller than predicted growth in tax revenues). Second, the recession both reduced revenues and raised outlays automatically. This factor accounts for less than one-tenth of the 10-year decline, and is only significant in 2002 and 2003. Finally, about 60% of the reduction …
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Description
Between January 2001 and January 2005, the Congressional Budget Office (CBO) reduced its 10-year baseline projection for the period 2002-2011 from a peak surplus of $5.6 trillion to a deficit of $2.6 trillion for three reasons. First, about one third of the reduction is due to technical revisions CBO made to its projections (e.g., to account for the smaller than predicted growth in tax revenues). Second, the recession both reduced revenues and raised outlays automatically. This factor accounts for less than one-tenth of the 10-year decline, and is only significant in 2002 and 2003. Finally, about 60% of the reduction was due to policy changes, the largest of which was tax cuts, and the second largest of which was increased military outlays. Even without a recession or technical revisions, policy changes alone would have pushed the budget into deficit from 2003 to 2005.
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Congressional Research Service Reports
The Congressional Research Service (CRS) is the public policy research arm of Congress. This legislative branch agency works exclusively for Members of Congress, their committees and their staff. This collection includes CRS reports from the mid-1960's through 2018—covering a variety of topics from agriculture to foreign policy to welfare.