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Economic News, Data and Analysis

Budget Outlook

OMB Watch – 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.

OMB Watch – 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.

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