Half of 2004 Deficit Deterioration Due to Revenue-Reduction Legislation

The Congressional Budget Office (CBO) is currently estimating a baseline $401 billion deficit for 2003 and a $480 billion deficit for 2004. In March, just six months ago, the CBO’s baseline indicated a much smaller $246 billion deficit for 2003 and a $200 billion deficit for 2004.

For 2004, this represents a $279 billion deterioration in the budget outlook (see Table 1). A detailed breakdown of the CBO data shows that 48% of the budget deterioration that occurred between March and August was due to legislative changes affecting revenue (see Table 2). At just over 16 percent of gross domestic product, revenue is now at its lowest level in 40 years. Download full report (.pdf)

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Beyond the Baseline: 10 Year Deficits Likely to Reach $5.9 Trillion

The Congressional Budget Office’s (CBO) August 2003 Budget and Economic Update shows a baseline projection of a $401 billion deficit for 2003, and a $480 billion deficit for 2004. The 10-year baseline projections show a $1.4 trillion deficit over the next ten years; however, as the report notes, the baseline is not intended to be a good predictor of actual budgetary outcomes. A better predictor of budget deficits under current policy would put the deficit for 2004 at $496 billion and the 10-year deficit at nearly $6 trillion. Download full report (.pdf)

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Deficit May Reach $500 billion in 2004

Reuters is reporting that the Congressional Budget Office (CBO) is expected to release deficit projections tomorrow showing deficits reaching approximately $500 billion for fiscal year 2004. In addition, the CBO's report will also contain 10-year budget forecasts, unlike the Administration's official numbers released through the Office of Management and Budget (OMB), which only have a five-year horizon. These longer-range forecasts are expected to show significant long-run damage to the budget outlook.

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Latest from the TPC

Tax Policy Center | A Project of the Urban Institute & the Brookings Institution

Here's the latest from the Urban-Brookings Tax Policy Center:

(1) The State Fiscal Crisis: Why it Happened, What to do About it Peter Orszag Milken Institute Review Third Quarter, 2003

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September Will be Appropriations Month

Looking foward to a hectic September...

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A Forward Look at the Budget

How long can OMB's Rosy Scenario keep telling those pretty lies?

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Long-term fiscal imbalance

Jagadeesh Gokhale and Kent Smetters argue that short-term deficit projections are inadequate to address the growing fiscal imbalance in Medicare and Social Security. At the very least, the OMB should return to 10-year projections rather than their current 5-year horizon.

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Economy and Jobs Watch

Two recent economic reports show the depth of economic mismanagement by the Bush administration. First, it was reported last week that the unemployment rate has risen to 6.1 percent in yet another indication of the poor state of the labor market. Second, the Congressional Budget Office (CBO) announced that it expects the current year’s budget deficit will be around $400 billion.

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The House Takes Up Permanent Repeal of the Estate Tax

After hijacking the child tax credit with add-ons that inflated the cost to $82 billion, House GOP leaders continue this month in their headlong rush to drain resources from government by cutting taxes for corporations and the wealthy. The campaign has just moved from the outrageous to the egregious.

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Cheaper at Half the Price

According to the results of a joint NPR-Kaiser Family Foundation-Kennedy School of Government poll released last month -- and confirmed by almost every other poll on Americans' attitudes toward tax cuts - we are all in favor of tax breaks, until we understand what we have to give up in return.

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